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Broadcom Corp  (NAS:BRCM) E10: \$1.08 (As of Sep. 2015)

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.

Broadcom Corp's adjusted earnings per share data for the three months ended in Sep. 2015 was \$0.690. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is \$1.08 for the trailing ten years ended in Sep. 2015.

As of today, Broadcom Corp's current stock price is \$54.67. Broadcom Corp's E10 for the quarter that ended in Sep. 2015 was \$1.08. Broadcom Corp's Shiller PE Ratio of today is 50.62.

Historical Data

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

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 E10 -1.34 -0.31 0.51 0.87 0.95

 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 E10 0.90 0.95 0.97 1.04 1.08

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, Broadcom Corp's adjusted earnings per share data for the three months ended in Sep. 2015 was:

 Adj_EPS = Earnings per Share (Diluted) / CPI of Sep. 2015 (Change) * Current CPI (Sep. 2015) = 0.69 / 237.945 * 237.945 = 0.690

Current CPI (Sep. 2015) = 237.945.

 per share eps CPI Adj_EPS 200512 0.330 196.800 0.399 200603 0.200 199.800 0.238 200606 0.180 202.900 0.211 200609 0.190 202.900 0.223 200612 0.070 201.800 0.083 200703 0.100 205.352 0.116 200706 0.060 208.352 0.069 200709 0.050 208.490 0.057 200712 0.160 210.036 0.181 200803 0.140 213.528 0.156 200806 0.250 218.815 0.272 200809 0.310 218.783 0.337 200812 -0.290 210.228 -0.328 200903 -0.190 212.709 -0.213 200906 0.030 215.693 0.033 200909 0.160 215.969 0.176 200912 0.120 215.949 0.132 201003 0.400 217.631 0.437 201006 0.520 217.965 0.568 201009 0.600 218.439 0.654 201012 0.470 219.179 0.510 201103 0.400 223.467 0.426 201106 0.310 225.722 0.327 201109 0.480 226.889 0.503 201112 0.460 225.672 0.485 201203 0.150 229.392 0.156 201206 0.280 229.478 0.290 201209 0.380 231.407 0.391 201212 0.430 229.601 0.446 201303 0.330 232.773 0.337 201306 -0.430 233.504 -0.438 201309 0.550 234.149 0.559 201312 0.290 233.049 0.296 201403 0.280 236.293 0.282 201406 -0.002 238.343 -0.002 201409 0.160 238.031 0.160 201412 0.640 234.812 0.649 201503 0.340 236.119 0.343 201506 0.630 238.638 0.628 201509 0.690 237.945 0.690

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.

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

 Shiller PE Ratio = Share Price / E10 = 54.67 / 1.08 = 50.62

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

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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