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ABB Ltd  (NYSE:ABB) E10: $1.34 (As of Sep. 2017)

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.

ABB Ltd's adjusted earnings per share data for the three months ended in Sep. 2017 was $0.270. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.34 for the trailing ten years ended in Sep. 2017.

As of today, ABB Ltd's current stock price is $25.61. ABB Ltd's E10 for the quarter that ended in Sep. 2017 was $1.34. ABB Ltd's Shiller PE Ratio of today is 19.11.

During the past 13 years, the highest Shiller PE Ratio of ABB Ltd was 62.84. The lowest was 12.64. And the median was 19.35.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

ABB Ltd Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.02 1.29 1.24 1.26 1.28

ABB Ltd Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.35 1.28 1.31 1.37 1.34

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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, ABB Ltd's adjusted earnings per share data for the three months ended in Sep. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Sep. 2017 (Change)*Current CPI (Sep. 2017)
=0.27/246.819*246.819
=0.270

Current CPI (Sep. 2017) = 246.819.

ABB Ltd Quarterly Data

per share eps CPI Adj_EPS
200712 0.760 210.036 0.893
200803 0.430 213.528 0.497
200806 0.420 218.815 0.474
200809 0.400 218.783 0.451
200812 0.090 210.228 0.106
200903 0.290 212.709 0.337
200906 0.300 215.693 0.343
200909 0.450 215.969 0.514
200912 0.240 215.949 0.274
201003 0.200 217.631 0.227
201006 0.270 217.965 0.306
201009 0.340 218.439 0.384
201012 0.310 219.179 0.349
201103 0.290 223.467 0.320
201106 0.390 225.722 0.426
201109 0.340 226.889 0.370
201112 0.360 225.672 0.394
201203 0.300 229.392 0.323
201206 0.290 229.478 0.312
201209 0.330 231.407 0.352
201212 0.260 229.601 0.279
201303 0.290 232.773 0.307
201306 0.330 233.504 0.349
201309 0.360 234.149 0.379
201312 0.220 233.049 0.233
201403 0.240 236.293 0.251
201406 0.280 238.343 0.290
201409 0.320 238.031 0.332
201412 0.300 234.812 0.315
201503 0.250 236.119 0.261
201506 0.260 238.638 0.269
201509 0.260 237.945 0.270
201512 0.100 236.525 0.104
201603 0.230 238.132 0.238
201606 0.190 241.018 0.195
201609 0.270 241.428 0.276
201612 0.200 241.432 0.204
201703 0.340 243.801 0.344
201706 0.240 244.955 0.242
201709 0.270 246.819 0.270

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 PE 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.

ABB Ltd's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=25.61/1.34
=19.11

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

During the past 13 years, the highest Shiller P/E Ratio of ABB Ltd was 62.84. The lowest was 12.64. And the median was 19.35.


Be Aware

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


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