What is the Graham Number?

The Graham Number is the maximum price a defensive investor should pay for a stock, per Benjamin Graham. It equals √(22.5 × EPS × book value per share). The 22.5 comes from Graham's limits of a 15 P/E and a 1.5 price-to-book ratio (15 × 1.5 = 22.5).

When does the Graham Number not work?

It needs positive earnings and positive book value, so it doesn't apply to unprofitable or negative-equity companies. It also understates value for asset-light businesses — software, brands, networks — whose worth isn't on the balance sheet.

Is a stock below its Graham Number automatically a buy?

No. It's one conservative screen, not a verdict. Graham himself paired it with a margin of safety and a check on earnings stability. Cross-check it against a DCF, PEGY and the company's debt before acting.

Benjamin Graham

Graham Number Calculator

Benjamin Graham's fair-value ceiling from earnings and book value.

Graham Number = √( 22.5 × EPS × Book Value per Share )

EPS (TTM)

Trailing-twelve-month earnings per share.

Book value / share

Shareholder equity ÷ shares outstanding.

Current priceoptional

Add it to get the verdict.

Enter EPS and book value per share to get the Graham Number.

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How it works

Benjamin Graham — Warren Buffett's mentor and the father of value investing — argued a defensive investor should never pay more than 15× earnings or 1.5× book value. Multiply those ceilings (15 × 1.5 = 22.5) and the fair-value limit becomes √(22.5 × EPS × book value per share).

If the current price sits below the Graham Number, the stock may be undervalued on Graham's conservative terms. Because it leans on book value, it reads low for intangible-heavy businesses and is most useful for banks, industrials and other balance-sheet-driven companies.

Frequently asked

What is the Graham Number?: The Graham Number is the maximum price a defensive investor should pay for a stock, per Benjamin Graham. It equals √(22.5 × EPS × book value per share). The 22.5 comes from Graham's limits of a 15 P/E and a 1.5 price-to-book ratio (15 × 1.5 = 22.5).
When does the Graham Number not work?: It needs positive earnings and positive book value, so it doesn't apply to unprofitable or negative-equity companies. It also understates value for asset-light businesses — software, brands, networks — whose worth isn't on the balance sheet.
Is a stock below its Graham Number automatically a buy?: No. It's one conservative screen, not a verdict. Graham himself paired it with a margin of safety and a check on earnings stability. Cross-check it against a DCF, PEGY and the company's debt before acting.

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Educational Use Only · Not Financial Advice

Analysis, scores, valuations, and buy zones are derived from publicly documented investor frameworks (Buffett, Lynch, Benjamin Graham, Phil Town) for learning purposes only. They are not recommendations from licensed financial advisors. Past performance does not guarantee future results. Prices may be delayed up to 15 minutes. Always conduct your own research before making any investment decisions.