Graham Number Calculator
Benjamin Graham's quick intrinsic value screen from earnings and book value, with the margin of safety at today's price.
The Graham number is the square root of 22.5 × EPS × book value per share, where 22.5 comes from Graham's limits of 15 times earnings and 1.5 times book value. It was designed for defensive investors buying stable, asset-heavy businesses in the 1970s, and it systematically undervalues modern companies whose worth sits in intangibles rather than on the balance sheet. Treat it as one screen among several, not a verdict.
The Graham number is the square root of 22.5 times earnings per share times book value per share. The constant is not arbitrary: Graham suggested a defensive investor pay no more than 15 times earnings and 1.5 times book value, and 15 multiplied by 1.5 is 22.5. The square root combines the two limits into a single ceiling.
Frequently asked questions
What is a good Graham number result?
A price below the Graham number suggests the stock passes Graham's defensive screen. He also wanted a margin of safety, meaning a meaningful discount rather than a price just barely underneath it.
Why does it return nothing for some companies?
It requires positive earnings and positive book value. A company with either one negative has no defined square root here, and Graham would have excluded it from a defensive portfolio anyway.
Does it work for technology companies?
Poorly. Software and pharmaceutical firms carry little book value relative to their earning power, so the formula systematically undervalues them. It is better suited to banks, industrials, and other balance-sheet-heavy businesses.
What is the revised Graham formula?
A later version, EPS times 8.5 plus twice the growth rate, scaled by bond yields, which attempts to account for growth and interest rates. It is shown alongside the classic number here, though it is sensitive to the growth estimate you supply.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.