FINANCIAL CALCULATORS
Graham Number Calculator
Calculate the intrinsic value of a stock using the Graham Number formula.
What is the Graham Number Calculator & How does it work?
The Graham Number is an investment valuation metric developed by Benjamin Graham. It helps investors determine the intrinsic value of a stock based on its earnings and book value.
To calculate the Graham Number, you need two key pieces of information: the average annual earnings per share (EPS) over the past seven years and the most recent book value per share. The formula is:
To calculate the Graham Number, you need two key pieces of information: the average annual earnings per share (EPS) over the past seven years and the most recent book value per share. The formula is:
Graham Number = sqrt{22.5 times text{EPS} times text{Book Value}}
var = meaning
EPS = Earnings Per Share
Book Value = Book Value Per Share
EPS = Earnings Per Share
Book Value = Book Value Per Share
Parameters
Result—
Frequently Asked Questions
What is the Graham Number?
The Graham Number is an investment valuation metric developed by Benjamin Graham that helps determine the intrinsic value of a stock.
How do I calculate the Graham Number?
To calculate the Graham Number, multiply the average annual EPS over the past seven years by the most recent book value per share, then multiply by 22.5 and take the square root.
What does EPS stand for in the Graham Number formula?
EPS stands for Earnings Per Share, which is the portion of a company's profit allocated to each outstanding share of common stock.
Why is the Graham Number important?
The Graham Number helps investors identify undervalued stocks by comparing their market value to their intrinsic value based on earnings and book value.
Can I use any EPS data for the calculation?
For a more accurate result, it's best to use the average annual EPS over the past seven years as recommended in the formula.
What is the significance of the 22.5 multiplier in the Graham Number formula?
The 22.5 multiplier in the formula represents a conservative estimate of the price-to-earnings ratio for stable, undervalued stocks.
How often should I recalculate the Graham Number for a stock?
It's advisable to recalculate the Graham Number periodically, such as annually or whenever there are significant changes in the company's financials.
Results are for informational purposes only and do not constitute professional advice.