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Electro Rent Corp  (NAS:ELRC) E10: \$0.80 (As of Feb. 2016)

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.

Electro Rent Corp's adjusted earnings per share data for the three months ended in Feb. 2016 was \$0.040. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is \$0.80 for the trailing ten years ended in Feb. 2016.

As of today, Electro Rent Corp's current stock price is \$15.50. Electro Rent Corp's E10 for the quarter that ended in Feb. 2016 was \$0.80. Electro Rent Corp's Shiller PE Ratio of today is 19.38.

Historical Data

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

Electro Rent Corp Annual Data

 May06 May07 May08 May09 May10 May11 May12 May13 May14 May15 E10 0.64 0.69 0.87 0.91 0.86

Electro Rent Corp Quarterly Data

 May11 Aug11 Nov11 Feb12 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 E10 0.86 0.86 0.85 0.83 0.80

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, Electro Rent Corp's adjusted earnings per share data for the three months ended in Feb. 2016 was:

 Adj_EPS = Earnings per Share (Diluted) / CPI of Feb. 2016 (Change) * Current CPI (Feb. 2016) = 0.04 / 237.111 * 237.111 = 0.040

Current CPI (Feb. 2016) = 237.111.

Electro Rent Corp Quarterly Data

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.

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

 Shiller PE Ratio = Share Price / E10 = 15.50 / 0.80 = 19.38

* 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.

Related Terms