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Red Hat Inc  (NYSE:RHT) E10: $0.84 (As of May. 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.

Red Hat Inc's adjusted earnings per share data for the three months ended in May. 2017 was $0.400. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $0.84 for the trailing ten years ended in May. 2017.

As of today, Red Hat Inc's current stock price is $128.36. Red Hat Inc's E10 for the quarter that ended in May. 2017 was $0.84. Red Hat Inc's Shiller PE Ratio of today is 152.81.

During the past 13 years, the highest Shiller PE Ratio of Red Hat Inc was 2863.00. The lowest was 81.57. And the median was 117.59.


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.

Red Hat Inc Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
E10 Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.46 0.55 0.62 0.68 0.80

Red Hat Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
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 0.74 0.77 0.80 0.84 0.89

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, Red Hat Inc's adjusted earnings per share data for the three months ended in May. 2017 was:

Adj_EPS= Earnings per Share (Diluted) /CPI of May. 2017 (Change)*Current CPI (May. 2017)
=0.4/244.733*244.733
=0.400

Current CPI (May. 2017) = 244.733.

Red Hat Inc Quarterly Data

per share eps CPI Adj_EPS
200708 0.090 207.917 0.106
200711 0.100 210.177 0.116
200802 0.100 211.693 0.116
200805 0.080 216.632 0.090
200808 0.100 219.086 0.112
200811 0.120 212.425 0.138
200902 0.080 212.193 0.092
200905 0.100 213.856 0.114
200908 0.150 215.834 0.170
200911 0.080 216.330 0.091
201002 0.120 216.741 0.135
201005 0.120 218.178 0.135
201008 0.120 218.312 0.135
201011 0.130 218.803 0.145
201102 0.170 221.309 0.188
201105 0.170 225.964 0.184
201108 0.200 226.545 0.216
201111 0.190 226.230 0.206
201202 0.190 227.663 0.204
201205 0.190 229.815 0.202
201208 0.180 230.379 0.191
201211 0.180 230.221 0.191
201302 0.220 232.166 0.232
201305 0.210 232.945 0.221
201308 0.210 233.877 0.220
201311 0.270 233.069 0.284
201402 0.240 234.781 0.250
201405 0.200 237.900 0.206
201408 0.250 237.852 0.257
201411 0.260 236.151 0.269
201502 0.250 234.722 0.261
201505 0.260 237.805 0.268
201508 0.280 238.316 0.288
201511 0.250 237.336 0.258
201602 0.290 237.111 0.299
201605 0.330 240.229 0.336
201608 0.320 240.849 0.325
201611 0.370 241.353 0.375
201702 0.370 243.603 0.372
201705 0.400 244.733 0.400

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.

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

Shiller PE Ratio=Share Price/E10
=128.36/0.84
=152.81

* 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 Red Hat Inc was 2863.00. The lowest was 81.57. And the median was 117.59.


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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