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Graham Number Calculator.
Calculate the Graham number from EPS and book value per share.
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Results update as you type.
FAQs
How does the graham number calculator work?
Enter the requested values to see a deterministic result. Assumptions are explicit and no live market or tax data is fetched.
Use Cases
Value stock screening
Quickly assess whether a stock is undervalued relative to its earnings and book value, helping you identify potential value investments.
Example: If a stock has EPS of $4 and book value per share of $20, the Graham number is sqrt(22.5*4*20) = $42.43.
Investment research
Use the Graham number as a starting point for deeper fundamental analysis, comparing it to the current market price to gauge margin of safety.
Example: Compare the calculated Graham number to the stock's current price to see if it trades below its estimated fair value.
Frequently Asked Questions
- What is the Graham number?
- The Graham number is a formula developed by Benjamin Graham to estimate the fair value of a stock. It is calculated as the square root of (22.5 × EPS × book value per share). It assumes a P/E ratio of 15 and a price-to-book ratio of 1.5.
- How do I use the Graham Number Calculator?
- Enter the earnings per share (EPS) and book value per share of a company. The calculator will compute the Graham number, which represents a rough upper limit of what a defensive investor should pay for the stock.
- Is the Graham number a guarantee of a stock's value?
- No, it is a heuristic, not a precise valuation. It works best for companies with positive earnings and book value. It does not account for growth, debt, or industry differences. Use it as a screening tool, not as the sole basis for investment decisions.
Tips & Common Mistakes
Tips
- Use the most recent annual EPS and book value per share from the company's financial statements for accuracy.
- The Graham number is most meaningful for companies with stable earnings and tangible assets; avoid using it for high-growth or asset-light firms.
- Remember that the Graham number is a conservative estimate; many investors require a margin of safety below this number before buying.
- For a more comprehensive valuation, combine the Graham number with other metrics like P/E ratio, P/B ratio, and cash flow analysis.
Common Mistakes to Avoid
- Using negative EPS or book value per share, which will result in an invalid or imaginary Graham number.
- Using diluted EPS instead of basic EPS without understanding the difference; be consistent with the data source.
- Treating the Graham number as an exact fair value rather than a rough estimate, leading to overconfidence in investment decisions.
Last updated: August 13, 2026