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Brown-Forman Corp  (NYSE:BF.B) E10: $1.50 (As of Jul. 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.

Brown-Forman Corp's adjusted earnings per share data for the three months ended in Jul. 2017 was $0.460. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.50 for the trailing ten years ended in Jul. 2017.

As of today, Brown-Forman Corp's current stock price is $58.55. Brown-Forman Corp's E10 for the quarter that ended in Jul. 2017 was $1.50. Brown-Forman Corp's Shiller PE Ratio of today is 39.03.

During the past 13 years, the highest Shiller PE Ratio of Brown-Forman Corp was 47.54. The lowest was 18.80. And the median was 31.62.


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.

Brown-Forman Corp Annual Data

Apr08 Apr09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Apr17
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.03 1.15 1.19 1.31 1.50

Brown-Forman Corp Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
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 1.33 1.38 1.44 1.50 1.50

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, Brown-Forman Corp's adjusted earnings per share data for the three months ended in Jul. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Jul. 2017 (Change)*Current CPI (Jul. 2017)
=0.46/244.786*244.786
=0.460

Current CPI (Jul. 2017) = 244.786.

Brown-Forman Corp Quarterly Data

per share eps CPI Adj_EPS
200710 0.277 208.936 0.325
200801 0.250 211.080 0.290
200804 0.220 214.823 0.251
200807 0.193 219.964 0.215
200810 0.313 216.573 0.354
200901 0.270 211.143 0.313
200904 0.177 213.240 0.203
200907 0.270 215.351 0.307
200910 0.330 216.177 0.374
201001 0.243 216.687 0.275
201004 0.163 218.009 0.183
201007 0.253 218.011 0.284
201010 0.350 218.711 0.392
201101 0.320 220.223 0.356
201104 0.377 224.906 0.410
201107 0.270 225.922 0.293
201110 0.365 226.421 0.395
201201 0.310 226.665 0.335
201204 0.240 230.085 0.255
201207 0.345 229.104 0.369
201210 0.400 231.317 0.423
201301 0.365 230.280 0.388
201304 0.265 232.531 0.279
201307 0.330 233.596 0.346
201310 0.480 233.546 0.503
201401 0.410 233.916 0.429
201404 0.305 237.072 0.315
201407 0.350 238.250 0.360
201410 0.485 237.433 0.500
201501 0.435 233.707 0.456
201504 0.330 236.599 0.341
201507 0.370 238.654 0.380
201510 0.490 237.838 0.504
201601 0.470 236.916 0.486
201604 1.280 239.261 1.310
201607 0.360 240.628 0.366
201610 0.500 241.729 0.506
201701 0.470 242.839 0.474
201704 0.370 244.524 0.370
201707 0.460 244.786 0.460

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.

Brown-Forman Corp's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=58.55/1.50
=39.03

* 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 Brown-Forman Corp was 47.54. The lowest was 18.80. And the median was 31.62.


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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