Free tool · No signup · Live ticker data
Graham Number Calculator
Calculate Benjamin Graham's intrinsic value formula for any stock. Enter EPS and book value manually or look up any US-listed ticker — get the Graham Number, margin of safety, and an instant undervalued/overvalued verdict.
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.
The Graham Number explained
Graham Number = √(22.5 × EPS × BVPS)
22.5 = 15× earnings × 1.5× book — Graham's two conservative multiples
Why 22.5?
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.
Margin of safety
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.
Graham Number vs DCF
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.
Limitations
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.
How to use this Graham Number calculator
Load a ticker or enter inputs manually
Switch to Ticker Lookup to auto-fill EPS and book value from Yahoo Finance for any US-listed stock. Or enter your own figures from the company's latest 10-K — useful when you want to stress-test different EPS assumptions. EPS must be TTM (trailing twelve months) diluted EPS.
Confirm EPS and book value per share
EPS is the sum of diluted EPS over the last four quarters. Book Value Per Share (BVPS) is shareholders' equity divided by shares outstanding. Both must be positive — the Graham Number does not apply to unprofitable companies or those with negative equity.
Enter the current market price
Type the current share price to calculate margin of safety: (Graham Number − Price) ÷ Graham Number × 100. A stock trading 15–30%+ below the Graham Number has a meaningful margin of safety. Above the Graham Number means the market price exceeds Graham's conservative estimate.
Read the verdict, then go deeper
The verdict badge is a first screen — not a buy signal. A green “Undervalued” badge means the stock passes Graham's conservative price test. Confirm with a DCF analysis and check earnings quality before acting. The Graham Number eliminates obvious overvaluation; it does not replace fundamental research.
Graham Number — Frequently Asked Questions
What is the Graham Number formula?
Graham Number = √(22.5 × EPS × BVPS). Where EPS is trailing twelve months earnings per share, BVPS is book value per share, and 22.5 = 15 × 1.5 (Graham's maximum P/E of 15 multiplied by his maximum P/B of 1.5). The formula produces the maximum price a defensive investor should pay, by combining both constraints into a single number.
Why is 22.5 used in the Graham Number?
Benjamin Graham set two rules for conservative stock selection in The Intelligent Investor: the price should not exceed 15 times earnings, and should not exceed 1.5 times book value. Multiplying 15 × 1.5 = 22.5. Taking the square root of 22.5 × EPS × BVPS produces a price that satisfies both constraints simultaneously. It is deliberately restrictive — it was meant for the 'defensive investor' seeking safety over growth.
What is a good margin of safety for the Graham Number?
Graham himself typically required a 30–50% margin of safety to compensate for estimation error and market risk. This calculator flags margin above 15% as potentially undervalued. A stock trading 30%+ below the Graham Number is firmly in Graham's buy territory — but only if the earnings and book value are stable and the business is sound. Do not treat the margin of safety as a buy signal in isolation.
When should I use Graham Number vs DCF?
Use the Graham Number as a fast screening tool to eliminate obvious overvaluation — it takes two inputs and produces a result in seconds. Use a DCF analysis when you want to model the business forward: it incorporates revenue growth, free cash flow margins, reinvestment rates, and terminal value. The Graham Number is a conservative floor; DCF is a forward-looking range. A stock that passes the Graham Number screen should then be evaluated with a full DCF before you commit capital.
Does the Graham Number work for growth stocks?
No. The Graham Number was designed for mature, stable, dividend-paying businesses with predictable earnings — the type Graham favored in the 1940s–1970s. For growth stocks like Nvidia, Amazon, or Tesla, current EPS and book value severely understate future earning power. These stocks will almost always appear 'overvalued' by the Graham Number because the market is pricing future growth, not today's balance sheet. Use P/E, PEG ratio, and DCF analysis instead for growth-oriented companies.
What is book value per share (BVPS)?
Book value per share = (Total shareholders' equity − Preferred equity) ÷ Shares outstanding. It represents the net asset value of the company on a per-share basis, as reported on the balance sheet. You can find it in any 10-K or 10-Q filing, or auto-fill it via the Ticker Lookup in this calculator. Note: book value is most meaningful for asset-heavy businesses (manufacturers, banks, real estate). For asset-light software or service companies, book value is often close to zero, making the Graham Number less informative.
What if EPS is negative?
The Graham Number cannot be calculated when EPS is negative. A negative value under the square root produces an imaginary number — there is no valid Graham Number for an unprofitable company. Graham viewed consistent profitability as a prerequisite for investment. If a company has negative TTM EPS, use a forward-looking DCF model based on projected free cash flows rather than reported earnings.