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Morgan Stanley  (NYSE:MS) E10: $1.21 (As of Sep. 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.

Morgan Stanley's adjusted earnings per share data for the three months ended in Sep. 2017 was $0.930. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.21 for the trailing ten years ended in Sep. 2017.

As of today, Morgan Stanley's current stock price is $49.11. Morgan Stanley's E10 for the quarter that ended in Sep. 2017 was $1.21. Morgan Stanley's Shiller PE Ratio of today is 40.59.

During the past 13 years, the highest Shiller PE Ratio of Morgan Stanley was 42.28. The lowest was 2.01. And the median was 9.77.


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.

Morgan Stanley Annual Data

Nov07 Nov08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.96 2.74 2.40 2.16 1.65

Morgan Stanley Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
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 1.82 1.65 1.47 1.28 1.21

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, Morgan Stanley's adjusted earnings per share data for the three months ended in Sep. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Sep. 2017 (Change)*Current CPI (Sep. 2017)
=0.93/246.819*246.819
=0.930

Current CPI (Sep. 2017) = 246.819.

Morgan Stanley Quarterly Data

per share eps CPI Adj_EPS
200711 -3.600 210.177 -4.228
200802 1.450 211.693 1.691
200805 0.950 216.632 1.082
200808 1.320 219.086 1.487
200811 -2.290 212.425 -2.661
200903 -0.570 212.709 -0.661
200906 -1.100 215.693 -1.259
200909 0.380 215.969 0.434
200912 0.360 215.949 0.411
201003 0.990 217.631 1.123
201006 1.090 217.965 1.234
201009 -0.070 218.439 -0.079
201012 0.420 219.179 0.473
201103 0.500 223.467 0.552
201106 -0.380 225.722 -0.416
201109 1.150 226.889 1.251
201112 -0.220 225.672 -0.241
201203 -0.060 229.392 -0.065
201206 0.290 229.478 0.312
201209 -0.550 231.407 -0.587
201212 0.300 229.601 0.322
201303 0.480 232.773 0.509
201306 0.410 233.504 0.433
201309 0.450 234.149 0.474
201312 0.020 233.049 0.021
201403 0.740 236.293 0.773
201406 0.920 238.343 0.953
201409 0.830 238.031 0.861
201412 -0.900 234.812 -0.946
201503 1.180 236.119 1.233
201506 0.850 238.638 0.879
201509 0.480 237.945 0.498
201512 0.390 236.525 0.407
201603 0.550 238.132 0.570
201606 0.750 241.018 0.768
201609 0.810 241.428 0.828
201612 0.810 241.432 0.828
201703 1.000 243.801 1.012
201706 0.870 244.955 0.877
201709 0.930 246.819 0.930

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.

Morgan Stanley's Shiller P/E Ratio of today is calculated as

Shiller PE Ratio=Share Price/E10
=49.11/1.21
=40.59

* 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 Morgan Stanley was 42.28. The lowest was 2.01. And the median was 9.77.


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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