Investing & MarketsTool Review

Graham Number Calculator

Provided byFinancial Toolsetfinancialtoolset.com

Calculate Benjamin Graham's intrinsic value formula from EPS and book value per share. See margin of safety and the 2...

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About this tool

What Graham Number Calculator does

The Graham Number Calculator helps investors estimate a stock's maximum fair price using Benjamin Graham's intrinsic value formula. By inputting a company's earnings per share and book value per share, the tool computes the Graham Number, which serves as a hard ceiling for defensive investors. The result also reveals the margin of safety: if the current market price is below the calculated number, the stock may offer a buying opportunity; if above, it suggests the stock is overvalued relative to Graham's criteria.

Step by step

How to use the Financial Toolset Graham Number Calculator

  1. 1

    Enter the company's Earnings Per Share (EPS) in dollars

  2. 2

    Enter the Book Value Per Share in dollars

  3. 3

    View the calculated Graham Number as the maximum fair price

  4. 4

    Compare the result to the current market price to assess margin of safety

Is it right for you

Best for

Value investors and conservative analysts who seek a quantitative benchmark to identify potentially undervalued stocks based on Graham's established limits for earnings and book value multiples.

Limitations

  • Formula relies on historical EPS and book value, which may not reflect future performance
  • The 22.5 constant may not suit all industries or current market conditions
  • Does not account for debt, growth rate, or other fundamental factors
Questions

Graham Number Calculator FAQ

What does the Graham Number actually tell me about a stock?
The Graham Number provides a single fair-value estimate that combines a limit of 15 times earnings and 1.5 times book value. If the stock's current price is below this number, it may indicate a margin of safety; if above, the stock may be overpriced per Graham's criteria.
Can I use the Graham Number for any stock?
The formula works best for stable, established companies with positive earnings and book value. It is less suitable for high-growth firms, early-stage companies, or stocks with volatile earnings where the 22.5 constant may not apply.
How is the 22.5 constant in the Graham Number derived?
The 22.5 constant comes from multiplying Graham's two guardrails: 15 times earnings and 1.5 times book value. This product creates a blended ceiling that respects both limits simultaneously in the square root formula.
If a stock trades below its Graham Number, is it a guaranteed buy?
Not necessarily. The Graham Number is one analytical tool and does not guarantee future performance. It should be used alongside other research, as it does not consider debt, management quality, or broader market conditions.
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