Question 1

What is the Graham Number?

Accepted Answer

The Graham Number is a maximum fair price for a stock derived from Benjamin Graham’s value investing rules. It is calculated as the square root of 22.5 times earnings per share times book value per share. The constant 22.5 comes from Graham’s rule that P/E should not exceed 15 and P/B should not exceed 1.5; 15 multiplied by 1.5 equals 22.5. A stock trading below its Graham Number is considered undervalued by Graham’s standards.

Question 2

How is the Graham Number calculated?

Accepted Answer

Graham Number = sqrt(22.5 × EPS × BVPS), where EPS is trailing twelve-month earnings per share and BVPS is book value per share (shareholder equity divided by diluted shares outstanding). For a stock with EPS of $4 and BVPS of $20, the Graham Number is sqrt(22.5 × 4 × 20) = sqrt(1800) = $42.43. Graham recommended buying only at or below 50% of this number for a real margin of safety.

Question 3

Should I buy a stock priced below its Graham Number?

Accepted Answer

A price below the Graham Number is one indicator of undervaluation, not a complete buy signal. Graham himself paired the metric with seven defensive criteria: large company size, strong financial condition, ten years of positive earnings, dividend record, earnings growth, moderate P/E, and moderate P/B. Use the Graham Number alongside business-quality assessment, debt analysis, and a margin of safety of 25 to 50 percent before buying.

Question 4

Does the Graham Number work for technology and growth stocks?

Accepted Answer

Not reliably. The Graham Number assumes positive earnings and tangible book value, which are weak signals for asset-light technology, biotech, and many growth companies whose intrinsic value lies in intangible assets, research pipelines, or future cash flows. For these, use discounted cash flow valuation (DCF) and the WACC calculator instead. The Graham Number is best suited to mature, profitable companies with substantial tangible book value.

Question 5

Is the Graham Number calculator on Worthmap free?

Accepted Answer

Yes. The Graham Number calculator is completely free, requires no account, and works for any stock for which you have EPS and book-value-per-share inputs. It runs entirely in your browser — no inputs are stored or sent to a server.

Calculateur Gratuit du Nombre de Graham | Worthmap