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Zale Corp (NYSE:ZLC)
E10
\$-2.43 (As of Jan. 2014)

E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. E10 is the average of the inflation adjusted earnings of a company over the past 10 years.

Zale Corp's adjusted earnings per share data for the three months ended in Jan. 2014 was \$1.130. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is \$-2.43 for the trailing ten years ended in Jan. 2014.

As of today, Zale Corp's current stock price is \$21.13. Zale Corp's E10 for the quarter that ended in Jan. 2014 was \$-2.43. Zale Corp's Shiller P/E Ratio of today is .

Definition

E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. When we calculate the today's Shiller P/E ratio of a stock, we use todays price divided by E10.

What is E10? How do we calculate E10?

E10 is the average of the inflation adjusted earnings of a company over the past 10 years. Lets use an example to explain.

If we want to calculate the E10 of Wal-Mart (WMT) for Dec. 31, 2010, we need to have the inflation data and the earnings from 2001 through 2010.

We adjusted the earnings of 2001 earnings data with the total inflation from 2001 through 2010 to the equivalent earnings in 2010. If the total inflation from 2001 to 2010 is 40%, and Wal-Mart earned \$1 a share in 2001, then the 2001s equivalent earnings in 2010 is \$1.4 a share. If Wal-Mart earns \$1 again in 2002, and the total inflation from 2002 through 2010 is 35%, then the equivalent 2002 earnings in 2010 is \$1.35. So on and so forth, you get the equivalent earnings of past 10 years. Then you add them together and divided the sum by 10 to get E10.

For example, Zale Corp's adjusted earnings per share data for the three months ended in Jan. 2014 was:

 Adj_EPS = Earnigns per Share / CPI of Jan. 2014 (Change) * Current CPI (Jan. 2014) = 1.13 / 233.916 * 233.916 = 1.130

Current CPI (Jan. 2014) = 233.916.

Zale Corp Quarterly Data

 201110 201201 201204 201207 201210 201301 201304 201307 201310 201401 per share eps -0.99 0.77 -0.14 -0.613 -0.88 1.02 0.13 -0.246 -0.83 1.13 CPI 226.421 226.665 230.085 229.104 231.317 230.28 232.531 233.596 233.546 233.916 Adj_EPS -1.023 0.795 -0.142 -0.626 -0.89 1.036 0.131 -0.246 -0.831 1.13 200904 200907 200910 201001 201004 201007 201010 201101 201104 201107 per share eps -0.61 -2.81 -1.87 0.21 -0.38 -0.888 -3.05 0.73 -0.28 -1.015 CPI 213.24 215.351 216.177 216.687 218.009 218.011 218.711 220.223 224.906 225.922 Adj_EPS -0.669 -3.052 -2.023 0.227 -0.408 -0.953 -3.262 0.775 -0.291 -1.051 200610 200701 200704 200707 200710 200801 200804 200807 200810 200901 per share eps -0.55 1.8 -0.08 0.031 -0.58 1.34 -0.4 -0.146 -1.43 -1 CPI 201.8 202.416 206.686 208.299 208.936 211.08 214.823 219.964 216.573 211.143 Adj_EPS -0.638 2.08 -0.091 0.035 -0.649 1.485 -0.436 -0.155 -1.545 -1.108 200404 200407 200410 200501 200504 200507 200510 200601 200604 200607 per share eps 0.22 0.131 -0.21 1.91 0.28 0.078 -0.47 1.78 0.35 -0.57 CPI 188 189.4 190.9 190.7 194.6 195.4 199.2 198.3 201.5 203.5 Adj_EPS 0.274 0.162 -0.257 2.343 0.337 0.093 -0.552 2.1 0.406 -0.655

Add all the adjusted EPS together and divide 10 will get our e10.

Explanation

If a company grows much fast than inflation, E10 may underestimate the company's earnings power. Shiller P/E Ratio can seem to be too high even the actual P/E is low.

For the Shiller P/E, the earnings of the past 10 years are inflation-adjusted and averaged. The result is used for P/E calculation. Since it looks at the average over the last 10 years, the Shiller P/E is also called PE10.

The Shiller P/E was first used by professor Robert Shiller to measure the valuation of the overall market. The same calculation is applied here to individual companies.

Zale Corp's Shiller P/E Ratio of today is calculated as

 Shiller P/E Ratio = Share Price / E10 = 21.13 / -2.43 =

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Be Aware

Shiller P/E Ratio works better for cyclical companies. It gives you a better idea on the company's real earnings power.

Related Terms

Shiller P/E Ratio

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Zale Corp Annual Data

 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 e10 1.31 1.49 1.43 1.44 1.13 0.24 -0.64 -1.69 -2.08 -2.34

Zale Corp Quarterly Data

 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 e10 -1.76 -1.97 -2.08 -2.08 -2.14 -2.31 -2.30 -2.34 -2.37 -2.43
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