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Bank of Montreal  (NYSE:BMO) E10: $4.80 (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.

Bank of Montreal's adjusted earnings per share data for the three months ended in Jul. 2017 was $1.615. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $4.80 for the trailing ten years ended in Jul. 2017.

As of today, Bank of Montreal's current stock price is $78.25. Bank of Montreal's E10 for the quarter that ended in Jul. 2017 was $4.80. Bank of Montreal's Shiller PE Ratio of today is 16.30.

During the past 13 years, the highest Shiller PE Ratio of Bank of Montreal was 19.40. The lowest was 6.12. And the median was 13.88.


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.

Bank of Montreal Annual Data

Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.95 4.96 4.76 4.16 4.16

Bank of Montreal 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 4.24 4.16 4.44 4.30 4.80

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, Bank of Montreal'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)
=1.61544523247/244.786*244.786
=1.615

Current CPI (Jul. 2017) = 244.786.

Bank of Montreal Quarterly Data

per share eps CPI Adj_EPS
200710 0.883 208.936 1.034
200801 0.465 211.080 0.540
200804 1.233 214.823 1.405
200807 0.967 219.964 1.077
200810 0.895 216.573 1.011
200901 0.318 211.143 0.369
200904 0.498 213.240 0.572
200907 0.864 215.351 0.982
200910 1.052 216.177 1.192
201001 1.073 216.687 1.212
201004 1.253 218.009 1.407
201007 1.084 218.011 1.217
201010 1.218 218.711 1.363
201101 1.348 220.223 1.499
201104 1.378 224.906 1.500
201107 1.141 225.922 1.236
201110 1.079 226.421 1.166
201201 1.609 226.665 1.738
201204 1.521 230.085 1.618
201207 1.400 229.104 1.496
201210 1.560 231.317 1.651
201301 1.542 230.280 1.639
201304 1.374 232.531 1.447
201307 1.596 233.596 1.672
201310 1.544 233.546 1.618
201401 1.444 233.916 1.511
201404 1.456 237.072 1.503
201407 1.555 238.250 1.598
201410 1.391 237.433 1.434
201501 1.204 233.707 1.262
201504 1.208 236.599 1.250
201507 1.399 238.654 1.435
201510 1.392 237.838 1.433
201601 1.112 236.916 1.149
201604 1.131 239.261 1.157
201607 1.425 240.628 1.450
201610 1.524 241.729 1.544
201701 1.684 242.839 1.697
201704 1.369 244.524 1.371
201707 1.615 244.786 1.615

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.

Bank of Montreal's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=78.25/4.80
=16.30

* 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 Bank of Montreal was 19.40. The lowest was 6.12. And the median was 13.88.


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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