📗 Graham Number Calculator
Calculate the Graham Number, Benjamin Graham’s classic formula for estimating the maximum price a defensive value investor should pay for a stock.
What is the Graham Number?
The Graham Number, developed by legendary value investor Benjamin Graham, estimates the maximum price a conservative, defensive investor should be willing to pay for a stock based on its earnings and book value.
The formula
Graham Number = √(22.5 × Earnings Per Share × Book Value Per Share). The constant 22.5 comes from Graham’s guideline that a stock’s price-to-earnings ratio should not exceed 15 and its price-to-book ratio should not exceed 1.5 (15 × 1.5 = 22.5).
This tool is for general educational purposes. The Graham Number works best for stable, profitable, asset-heavy companies and is less useful for growth stocks, unprofitable companies, or those with negative book value.