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Netflix Inc  (NAS:NFLX) E10: $0.80 (As of Mar. 2019)

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.

Netflix Inc's adjusted earnings per share data for the three months ended in Mar. 2019 was $0.760. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $0.80 for the trailing ten years ended in Mar. 2019.

As of today, Netflix Inc's current stock price is $352.21. Netflix Inc's E10 for the quarter that ended in Mar. 2019 was $0.80. Netflix Inc's Shiller PE Ratio of today is 440.26.

During the past 13 years, the highest Shiller PE Ratio of Netflix Inc was 673.92. The lowest was 38.50. And the median was 295.09.


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.

Netflix Inc Annual Data

Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.29 0.31 0.35 0.46 0.71

Netflix Inc Quarterly Data

Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19
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 0.53 0.61 0.70 0.71 0.80

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.


Netflix Inc Distribution

* The bar in red indicates where Netflix Inc's E10 falls into.



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, Netflix Inc's adjusted earnings per share data for the three months ended in Mar. 2019 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of Mar. 2019 (Change)*Current CPI (Mar. 2019)
=0.76/254.202*254.202
=0.760

Current CPI (Mar. 2019) = 254.202.

Netflix Inc Quarterly Data

per share eps CPI Adj_EPS
200906 0.077 215.693 0.091
200909 0.074 215.969 0.087
200912 0.079 215.949 0.093
201003 0.084 217.631 0.098
201006 0.114 217.965 0.133
201009 0.100 218.439 0.116
201012 0.124 219.179 0.144
201103 0.159 223.467 0.181
201106 0.180 225.722 0.203
201109 0.166 226.889 0.186
201112 0.104 225.672 0.117
201203 -0.011 229.392 -0.012
201206 0.016 229.478 0.018
201209 0.019 231.407 0.021
201212 0.019 229.601 0.021
201303 0.007 232.773 0.008
201306 0.070 233.504 0.076
201309 0.074 234.149 0.080
201312 0.113 233.049 0.123
201403 0.123 236.293 0.132
201406 0.160 238.343 0.171
201409 0.140 238.031 0.150
201412 0.193 234.812 0.209
201503 0.050 236.119 0.054
201506 0.060 238.638 0.064
201509 0.070 237.945 0.075
201512 0.100 236.525 0.107
201603 0.060 238.132 0.064
201606 0.090 241.018 0.095
201609 0.120 241.428 0.126
201612 0.150 241.432 0.158
201703 0.400 243.801 0.417
201706 0.150 244.955 0.156
201709 0.290 246.819 0.299
201712 0.410 246.524 0.423
201803 0.640 249.554 0.652
201806 0.850 251.989 0.857
201809 0.890 252.439 0.896
201812 0.300 251.233 0.304
201903 0.760 254.202 0.760

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.

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

Shiller PE Ratio=Share Price/E10
=352.21/0.80
=440.26

* 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 Netflix Inc was 673.92. The lowest was 38.50. And the median was 295.09.


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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