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CarMax Inc  (NYSE:KMX) E10: $2.22 (As of Nov. 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.

CarMax Inc's adjusted earnings per share data for the three months ended in Nov. 2017 was $0.810. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $2.22 for the trailing ten years ended in Nov. 2017.

As of today, CarMax Inc's current stock price is $71.33. CarMax Inc's E10 for the quarter that ended in Nov. 2017 was $2.22. CarMax Inc's Shiller PE Ratio of today is 32.13.

During the past 13 years, the highest Shiller PE Ratio of CarMax Inc was 70.26. The lowest was 13.04. And the median was 34.17.


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.

CarMax Inc Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.11 1.27 1.48 1.72 1.99

CarMax Inc Quarterly Data

Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17
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 1.91 1.99 2.07 2.15 2.22

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, CarMax Inc's adjusted earnings per share data for the three months ended in Nov. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Nov. 2017 (Change)*Current CPI (Nov. 2017)
=0.81/246.669*246.669
=0.810

Current CPI (Nov. 2017) = 246.669.

CarMax Inc Quarterly Data

per share eps CPI Adj_EPS
200802 0.100 211.693 0.117
200805 0.130 216.632 0.148
200808 0.060 219.086 0.068
200811 -0.100 212.425 -0.116
200902 0.170 212.193 0.198
200905 0.130 213.856 0.150
200908 0.460 215.834 0.526
200911 0.330 216.330 0.376
201002 0.340 216.741 0.387
201005 0.440 218.178 0.497
201008 0.480 218.312 0.542
201011 0.360 218.803 0.406
201102 0.370 221.309 0.412
201105 0.540 225.964 0.589
201108 0.480 226.545 0.523
201111 0.360 226.230 0.393
201202 0.410 227.663 0.444
201205 0.520 229.815 0.558
201208 0.480 230.379 0.514
201211 0.410 230.221 0.439
201302 0.460 232.166 0.489
201305 0.640 232.945 0.678
201308 0.620 233.877 0.654
201311 0.470 233.069 0.497
201402 0.430 234.781 0.452
201405 0.760 237.900 0.788
201408 0.700 237.852 0.726
201411 0.600 236.151 0.627
201502 0.670 234.722 0.704
201505 0.860 237.805 0.892
201508 0.820 238.316 0.849
201511 0.630 237.336 0.655
201602 0.710 237.111 0.739
201605 0.900 240.229 0.924
201608 0.840 240.849 0.860
201611 0.720 241.353 0.736
201702 0.810 243.603 0.820
201705 1.130 244.733 1.139
201708 0.980 245.519 0.985
201711 0.810 246.669 0.810

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.

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

Shiller PE Ratio=Share Price/E10
=71.33/2.22
=32.13

* 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 CarMax Inc was 70.26. The lowest was 13.04. And the median was 34.17.


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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