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Netflix Inc  (NAS:NFLX) E10: $0.43 (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.

Netflix Inc's adjusted earnings per share data for the three months ended in Sep. 2017 was $0.290. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $0.43 for the trailing ten years ended in Sep. 2017.

As of today, Netflix Inc's current stock price is $196.32. Netflix Inc's E10 for the quarter that ended in Sep. 2017 was $0.43. Netflix Inc's Shiller PE Ratio of today is 456.56.

During the past 13 years, the highest Shiller PE Ratio of Netflix Inc was 471.35. The lowest was 38.50. And the median was 237.44.


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

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 0.20 0.23 0.29 0.31 0.34

Netflix Inc 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 0.33 0.34 0.38 0.40 0.43

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, Netflix Inc'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)
=0.29/246.819*246.819
=0.290

Current CPI (Sep. 2017) = 246.819.

Netflix Inc Quarterly Data

per share eps CPI Adj_EPS
200712 0.033 210.036 0.039
200803 0.030 213.528 0.035
200806 0.060 218.815 0.068
200809 0.047 218.783 0.053
200812 0.053 210.228 0.062
200903 0.053 212.709 0.061
200906 0.077 215.693 0.088
200909 0.074 215.969 0.085
200912 0.079 215.949 0.090
201003 0.084 217.631 0.095
201006 0.114 217.965 0.129
201009 0.100 218.439 0.113
201012 0.124 219.179 0.140
201103 0.159 223.467 0.176
201106 0.180 225.722 0.197
201109 0.166 226.889 0.181
201112 0.090 225.672 0.098
201203 -0.011 229.392 -0.012
201206 0.016 229.478 0.017
201209 0.019 231.407 0.020
201212 0.019 229.601 0.020
201303 0.007 232.773 0.007
201306 0.070 233.504 0.074
201309 0.074 234.149 0.078
201312 0.109 233.049 0.115
201403 0.123 236.293 0.128
201406 0.160 238.343 0.166
201409 0.140 238.031 0.145
201412 0.190 234.812 0.200
201503 0.050 236.119 0.052
201506 0.060 238.638 0.062
201509 0.070 237.945 0.073
201512 0.100 236.525 0.104
201603 0.060 238.132 0.062
201606 0.090 241.018 0.092
201609 0.120 241.428 0.123
201612 0.160 241.432 0.164
201703 0.400 243.801 0.405
201706 0.150 244.955 0.151
201709 0.290 246.819 0.290

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
=196.32/0.43
=456.56

* 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 Netflix Inc was 471.35. The lowest was 38.50. And the median was 237.44.


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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