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A.O. Smith Corp  (NYSE:AOS) E10: $1.14 (As of Jun. 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.

A.O. Smith Corp's adjusted earnings per share data for the three months ended in Jun. 2017 was $0.530. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.14 for the trailing ten years ended in Jun. 2017.

As of today, A.O. Smith Corp's current stock price is $61.59. A.O. Smith Corp's E10 for the quarter that ended in Jun. 2017 was $1.14. A.O. Smith Corp's Shiller PE Ratio of today is 54.03.

During the past 13 years, the highest Shiller PE Ratio of A.O. Smith Corp was 53.98. The lowest was 11.12. And the median was 25.72.


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.

A.O. Smith Corp 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 0.61 0.67 0.76 0.90 1.05

A.O. Smith Corp Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
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 0.98 1.01 1.05 1.10 1.14

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, A.O. Smith Corp's adjusted earnings per share data for the three months ended in Jun. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Jun. 2017 (Change)*Current CPI (Jun. 2017)
=0.53/244.955*244.955
=0.530

Current CPI (Jun. 2017) = 244.955.

A.O. Smith Corp Quarterly Data

per share eps CPI Adj_EPS
200709 0.132 208.490 0.155
200712 0.093 210.036 0.108
200803 0.120 213.528 0.138
200806 0.167 218.815 0.187
200809 0.117 218.783 0.131
200812 0.037 210.228 0.043
200903 0.047 212.709 0.054
200906 0.140 215.693 0.159
200909 0.190 215.969 0.216
200912 0.142 215.949 0.161
201003 0.168 217.631 0.189
201006 0.090 217.965 0.101
201009 0.173 218.439 0.194
201012 0.175 219.179 0.196
201103 0.220 223.467 0.241
201106 0.270 225.722 0.293
201109 0.978 226.889 1.056
201112 0.173 225.672 0.188
201203 0.255 229.392 0.272
201206 0.190 229.478 0.203
201209 0.200 231.407 0.212
201212 0.210 229.601 0.224
201303 0.210 232.773 0.221
201306 0.225 233.504 0.236
201309 0.250 234.149 0.262
201312 0.230 233.049 0.242
201403 0.255 236.293 0.264
201406 0.315 238.343 0.324
201409 0.280 238.031 0.288
201412 0.295 234.812 0.308
201503 0.325 236.119 0.337
201506 0.395 238.638 0.405
201509 0.410 237.945 0.422
201512 0.450 236.525 0.466
201603 0.410 238.132 0.422
201606 0.490 241.018 0.498
201609 0.470 241.428 0.477
201612 0.470 241.432 0.477
201703 0.500 243.801 0.502
201706 0.530 244.955 0.530

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.

A.O. Smith Corp's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=61.59/1.14
=54.03

* 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 A.O. Smith Corp was 53.98. The lowest was 11.12. And the median was 25.72.


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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