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Microsoft Corp  (NAS:MSFT) E10: \$2.40 (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.

Microsoft Corp's adjusted earnings per share data for the three months ended in Sep. 2017 was \$0.840. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is \$2.40 for the trailing ten years ended in Sep. 2017.

As of today, Microsoft Corp's current stock price is \$90.14. Microsoft Corp's E10 for the quarter that ended in Sep. 2017 was \$2.40. Microsoft Corp's Shiller PE Ratio of today is 37.56.

During the past 13 years, the highest Shiller PE Ratio of Microsoft Corp was 37.82. The lowest was 13.29. And the median was 20.81.

Historical Data

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

Microsoft Corp Annual Data

 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 E10 1.88 2.11 2.12 2.21 2.34

Microsoft Corp Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 E10 2.24 2.27 2.30 2.34 2.40

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, Microsoft Corp'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) = 0.84 / 246.819 * 246.819 = 0.840

Current CPI (Sep. 2017) = 246.819.

Microsoft Corp Quarterly Data

 per share eps CPI Adj_EPS 200712 0.500 210.036 0.588 200803 0.470 213.528 0.543 200806 0.460 218.815 0.519 200809 0.480 218.783 0.542 200812 0.470 210.228 0.552 200903 0.330 212.709 0.383 200906 0.340 215.693 0.389 200909 0.400 215.969 0.457 200912 0.740 215.949 0.846 201003 0.450 217.631 0.510 201006 0.510 217.965 0.578 201009 0.620 218.439 0.701 201012 0.770 219.179 0.867 201103 0.610 223.467 0.674 201106 0.680 225.722 0.744 201109 0.680 226.889 0.740 201112 0.780 225.672 0.853 201203 0.600 229.392 0.646 201206 -0.060 229.478 -0.065 201209 0.530 231.407 0.565 201212 0.760 229.601 0.817 201303 0.720 232.773 0.763 201306 0.590 233.504 0.624 201309 0.620 234.149 0.654 201312 0.780 233.049 0.826 201403 0.680 236.293 0.710 201406 0.550 238.343 0.570 201409 0.540 238.031 0.560 201412 0.710 234.812 0.746 201503 0.610 236.119 0.638 201506 -0.380 238.638 -0.393 201509 0.610 237.945 0.633 201512 0.620 236.525 0.647 201603 0.470 238.132 0.487 201606 0.400 241.018 0.410 201609 0.720 241.428 0.736 201612 0.660 241.432 0.675 201703 0.610 243.801 0.618 201706 0.840 244.955 0.846 201709 0.840 246.819 0.840

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.

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

 Shiller PE Ratio = Share Price / E10 = 90.14 / 2.40 = 37.56

* 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 Microsoft Corp was 37.82. The lowest was 13.29. And the median was 20.81.

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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