Editor: unfortunately the data source on the stock prices sunset. We’ll update the main feed when we update this for the new IEX API (see the Stock Return Calculator)
On this page is a Graham Number Calculator which can auto-populate and lookup financial information for over 2,000 American Stocks.
The calculator works with your inputs to estimate a stock’s fundamental value with Benjamin Graham’s Formula. As a bonus, we also automatically populate annual financial data for earnings and book price for some stock.
Automatic Graham Number Calculator for Stock Value Screening
Data from Sharadar.
Note: This calculator is for informational purposes only. Data based on a stock’s last annual report; adjust values manually for any recent information.
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 [Ed: the set has been removed] 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 suggested by Benjamin Graham to estimate 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 compan,y then multiplies by 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 from the equation is the highest price where a stock is reasonably valued according to Graham.
With those numbers in hand, the calculation is straightforward:
- (15 * EPS * 1.5 * BVPS) ^ (1/2) (square root) or simplified:
So, a company worth $50 in Book Value Per Share which earned $1.50 per share last year would be worth:
- (15 * 1.5 * 1.5 * 50) ^ (1/2)
If the stock was trading at $100 a share?
The Graham Number formula would suggest a pass on that stock.
Remember: the Graham Number is a quick screenduring your your stock due diligence. Historically, it has performed reasonably well (when there are cheap enough valuations that enough stocks make the cut, of course). However, the fateful warning applies: sometimes stocks are cheap for a reason.
Add it to your toolbelt but don’t solely rely on it.
Try our other stock valuation tools:
You can find all our finance calculators here.