Calculator
Graham number calculator
The square root of 22.5 times earnings per share times book value per share. Type your own numbers; nothing is sent anywhere.
The formula
Graham number = √(22.5 × EPS × book value per share)
A worked example
With EPS of $4.00 and book value per share of $30.00: 22.5 × 4.00 × 30.00 = 2,700, and the square root of 2,700 is $51.96.
How to read it
Benjamin Graham described the figure in The Intelligent Investor as a ceiling for what a defensive investor might pay: the 22.5 comes from 15 times earnings multiplied by 1.5 times book value. It needs positive earnings and positive book value. It is a rule of thumb from 1949, not a forecast, and it ignores growth, debt, cash flow quality and your own situation.
Educational, not investment advice. The result is arithmetic on the inputs you typed.
Using real company figures
Company pages show the EPS, book value per share and free cash flow per share from each company's latest annual report to the SEC, which you can copy into this calculator. Browse 487 companies or start the worksheet with a company.
Questions
Why 22.5?
It is 15 (a price-to-earnings ceiling) multiplied by 1.5 (a price-to-book ceiling). The square root lets either ratio be higher if the other is lower.
Why does it show nothing for a company with a loss?
Earnings per share must be above zero for the square root to exist, so the calculator says so instead of inventing a number.
Does this calculator tell me what to do?
No. It is arithmetic on the numbers you enter. It is educational and not investment advice.
Other calculators
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- P/E ratioPrice divided by earnings per share, and its inverse, the earnings yield.
- Book value per shareShareholders' equity divided by shares, and the price-to-book ratio if you add a price.
- PEG ratioP/E divided by an expected annual earnings growth rate you enter.
- Dividend discount modelValue of a dividend that grows at a steady rate, discounted at the return you require.
- Free cash flow yieldFree cash flow per share as a percentage of a price you enter.
- Return on equityNet income divided by shareholders' equity.