Switch to:
Southwest Airlines Co  (NYSE:LUV) E10: $1.40 (As of Jun. 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.

Southwest Airlines Co's adjusted earnings per share data for the three months ended in Jun. 2017 was $1.230. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.40 for the trailing ten years ended in Jun. 2017.

As of today, Southwest Airlines Co's current stock price is $59.37. Southwest Airlines Co's E10 for the quarter that ended in Jun. 2017 was $1.40. Southwest Airlines Co's Shiller PE Ratio of today is 42.41.

During the past 13 years, the highest Shiller PE Ratio of Southwest Airlines Co was 66.35. The lowest was 8.55. And the median was 23.72.


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.

Southwest Airlines Co Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.53 0.57 0.69 0.95 1.25

Southwest Airlines Co Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
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 1.12 1.18 1.25 1.31 1.40

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, Southwest Airlines Co's adjusted earnings per share data for the three months ended in Jun. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Jun. 2017 (Change)*Current CPI (Jun. 2017)
=1.23/244.955*244.955
=1.230

Current CPI (Jun. 2017) = 244.955.

Southwest Airlines Co Quarterly Data

per share eps CPI Adj_EPS
200709 0.220 208.490 0.258
200712 0.150 210.036 0.175
200803 0.050 213.528 0.057
200806 0.440 218.815 0.493
200809 -0.160 218.783 -0.179
200812 -0.080 210.228 -0.093
200903 -0.120 212.709 -0.138
200906 0.120 215.693 0.136
200909 -0.020 215.969 -0.023
200912 0.150 215.949 0.170
201003 0.010 217.631 0.011
201006 0.150 217.965 0.169
201009 0.270 218.439 0.303
201012 0.170 219.179 0.190
201103 0.010 223.467 0.011
201106 0.210 225.722 0.228
201109 -0.180 226.889 -0.194
201112 0.200 225.672 0.217
201203 0.130 229.392 0.139
201206 0.300 229.478 0.320
201209 0.020 231.407 0.021
201212 0.110 229.601 0.117
201303 0.080 232.773 0.084
201306 0.310 233.504 0.325
201309 0.370 234.149 0.387
201312 0.300 233.049 0.315
201403 0.220 236.293 0.228
201406 0.670 238.343 0.689
201409 0.480 238.031 0.494
201412 0.280 234.812 0.292
201503 0.660 236.119 0.685
201506 0.900 238.638 0.924
201509 0.880 237.945 0.906
201512 0.820 236.525 0.849
201603 0.790 238.132 0.813
201606 1.280 241.018 1.301
201609 0.620 241.428 0.629
201612 0.850 241.432 0.862
201703 0.570 243.801 0.573
201706 1.230 244.955 1.230

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.

Southwest Airlines Co's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=59.37/1.40
=42.41

* 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 Southwest Airlines Co was 66.35. The lowest was 8.55. And the median was 23.72.


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


Headlines

From the Internet

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK