Inputs
Enter the current share price to see margin of safety.
Result
Enter EPS and book value (or look up a ticker) to calculate the Graham Number.
Graham Number = √(22.5 × EPS × BVPS)
22.5 = 15× earnings × 1.5× book — Graham's two conservative multiples
Benjamin Graham set two anchors for safe stock valuation in The Intelligent Investor: a company should trade at no more than 15× earnings and no more than 1.5× book value. Multiplied together: 15 × 1.5 = 22.5. Taking the square root of 22.5 × EPS × BVPS gives a single price that satisfies both constraints simultaneously. It's deliberately conservative — designed to protect against overpaying, not to find the highest defensible valuation.
Graham's core principle: buy at a meaningful discount to intrinsic value to absorb estimation error. A margin of safety above 15% means the current price provides a buffer — if your EPS or book value estimate is slightly off, you still haven't overpaid. Below zero means the stock already prices in optimistic assumptions, with no room for error. Graham typically required 30–50% margins; this calculator flags anything above 15% as potentially interesting.
The Graham Number is a quick screen, not a complete valuation. It takes two inputs and produces a conservative floor price in seconds — ideal for filtering a watchlist. A DCF analysis models future free cash flows explicitly, accounts for growth rates, discount rates, and terminal value, and is far more appropriate for projecting where a business will be in 10 years. Use Graham Number to eliminate obvious overvaluation; use DCF to confirm before you buy.
The Graham Number works best for mature, profitable, dividend-paying companies with stable earnings — the kind Graham favored in the 1940s–70s. It breaks down for growth stocks (Amazon, Nvidia) where earnings today understates future earning power, for companies with negative or near-zero EPS, for asset-light businesses where book value is uninformative, and for financial companies where book value has a different meaning. Pair it with P/E analysis and sector context before drawing conclusions.