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Health Net Inc  (NYSE:HNT) E10: $1.66 (As of Dec. 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.

Health Net Inc's adjusted earnings per share data for the three months ended in Dec. 2015 was $0.472. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.66 for the trailing ten years ended in Dec. 2015.

As of today, Health Net Inc's current stock price is $67.19. Health Net Inc's E10 for the quarter that ended in Dec. 2015 was $1.66. Health Net Inc's Shiller PE Ratio of today is 40.48.


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.

Health Net Inc Annual Data

Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.58 1.52 1.50 1.65 1.66

Health Net Inc Quarterly Data

Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15
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 1.65 1.68 1.71 1.69 1.66

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, Health Net Inc's adjusted earnings per share data for the three months ended in Dec. 2015 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Dec. 2015 (Change)*Current CPI (Dec. 2015)
=0.472/236.525*236.525
=0.472

Current CPI (Dec. 2015) = 236.525.

Health Net Inc Quarterly Data

per share eps CPI Adj_EPS
200603 0.650 199.800 0.769
200606 0.650 202.900 0.758
200609 0.760 202.900 0.886
200612 0.720 201.800 0.844
200703 0.770 205.352 0.887
200706 0.800 208.352 0.908
200709 -0.930 208.490 -1.055
200712 1.042 210.036 1.173
200803 -0.330 213.528 -0.366
200806 0.710 218.815 0.767
200809 0.170 218.783 0.184
200812 0.342 210.228 0.385
200903 0.210 212.709 0.234
200906 0.380 215.693 0.417
200909 -0.640 215.969 -0.701
200912 -0.435 215.949 -0.476
201003 0.160 217.631 0.174
201006 0.450 217.965 0.488
201009 0.640 218.439 0.693
201012 0.830 219.179 0.896
201103 -1.160 223.467 -1.228
201106 0.630 225.722 0.660
201109 0.700 226.889 0.730
201112 0.715 225.672 0.749
201203 -0.320 229.392 -0.330
201206 1.480 229.478 1.525
201209 0.220 231.407 0.225
201212 0.073 229.601 0.075
201303 0.620 232.773 0.630
201306 0.420 233.504 0.425
201309 0.830 234.149 0.838
201312 0.245 233.049 0.249
201403 0.360 236.293 0.360
201406 1.490 238.343 1.479
201409 -0.110 238.031 -0.109
201412 0.062 234.812 0.062
201503 0.380 236.119 0.381
201506 0.750 238.638 0.743
201509 0.770 237.945 0.765
201512 0.472 236.525 0.472

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.

Health Net Inc's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=67.19/1.66
=40.48

* 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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