Graham Number Calculator - Stock Fair Value

The Graham number is a historical value-investing screen that combines earnings per share and book value per share. The formula takes the square root of 22.5 multiplied by EPS and BVPS. The constant 22.5 comes from multiplying benchmark price-to-earnings and price-to-book limits of 15 and 1.5. The result can be interpreted as a price ceiling under those assumptions, not as a precise intrinsic value. The Graham number calculator also compares an entered market price with that number and reports the difference and percentage margin of safety. Use normalized, comparable per-share figures. EPS should reflect sustainable earnings rather than an unusual gain, temporary tax benefit, or severely depressed cycle. Diluted EPS is often more conservative than basic EPS. BVPS should correspond to the same share class and reporting period. Intangible-heavy or asset-light businesses can have low or negative book value even when economically valuable, while old accounting values can understate some assets. Financial companies may make book value more relevant, but asset quality and regulation remain important. The formula requires non-negative EPS and BVPS to produce a real square root. A zero input gives a zero Graham number and makes a margin-of-safety percentage uninformative. Companies with losses or negative equity need other valuation methods. Even with positive inputs, a market price below the Graham number is not proof that a stock is undervalued. Declining operations, leverage, poor governance, dilution, litigation, obsolete assets, or weak cash conversion may justify a low valuation. Treat the output as one screening signal within a broader analysis. Review revenue and earnings quality, free cash flow, debt, competitive position, management capital allocation, industry cyclicality, and current disclosures. Compare assumptions with peers and run scenarios using normalized EPS or adjusted tangible book value when appropriate. The original benchmark multiples arose in a different interest-rate and market environment, so they need not fit every sector or period. This independent educational calculator does not provide investment advice, a target price, or a recommendation to buy or sell. Verify financial statement values and consider qualified professional advice before making an investment decision.