On this page is a Graham Number Calculator which can auto-populate and lookup financial information for over 2,000 American Stocks.
While the calculator can be used alone to estimate a stock’s fundamental value with Benjamin Graham’s Formula, we also incorporate data from Sharadar (via Quandl) to populate annual financial data for earnings and book price.
Automatic Graham Number Calculator for Stock Value Screening
Note: This calculator is for informational purposes only! Data is annual based on a stock’s last annual report; you’ll want to adjust values for any recent information. Be sure to double check any valuations and inputs.
How to Use the Graham Number Calculator
- (Optional) Enter a Ticker Symbol and hit ‘Populate Graham Number Calculator‘ in the lower form.
- The Graham Number Calculator supports over 2,000 ticker symbols. You can check here for more information on the companies available.
- Edit (or check) the populated values and click ‘Calculate Graham Calculator’ in the upper form.
- Note that the stock price may be a few days old; it uses the same backend as the Stock Reinvested Dividends Calculator; methodology in link.
- Book value and earnings come from the last annual financial report. To incorporate new information, manually change the earning and book value fields.
- You can also adjust the weights assigned to the book value and earnings from the respective 1.5 and 15 suggested by Benjamin Graham.
Using The Graham Number for Stock Valuation
Graham’s number was a particularly simple formula suggested by Benjamin Graham for estimating the fundamental value of a stock.
At its most basic level, the Graham Number starts with the Book Value Per Share and the Earnings Per Share of a company then multiplies by some magic numbers. Taking the square root of that intermediate value then suggests a ‘reasonable valuation’. In the original formulation, EPS uses a multiplier of 15 while BVPS is assigned 1.5 and the resulting number is the Fair Value of the stock. Read: the output is the highest price where a stock is reasonable.
With those numbers in hand, the calculation is straightforward:
- (15 * EPS * 1.5 * BVPS) ^ (1/2) (square root) or simplified:
So, for a company worth $50 in Book Value Per Share which earned $1.50 per share in the last year would be worth:
- (15 * 1.5 * 1.5 * 50) ^ (1/2)
If, like in the above default contrived example, the stock was trading at $100 a share?
The Graham Number formula would suggest a pass on that stock.
Now, remember: the Graham Number is only a quick screener in the context of your stock due diligence. Historically, it has performed reasonably well (when there are cheap enough valuations that enough stocks make the cut, of course), although that oh-so-common common warning applies… sometimes stocks are cheap for a reason. Add it to your toolbelt but don’t solely rely on it.