Graham number calculator

How to read the result

The Graham number is an estimate of the most a defensive investor should pay — not a price target. If the stock trades meaningfully belowit, that gap is the margin of safety: room for the estimate to be wrong and the investment to still work out. If it trades above, Graham's own rule says pass, regardless of how good the story sounds.

It's one gate, not the whole test. It says nothing about growth, debt, competitive position, or whether the earnings are even real — which is exactly why Edge Thirteen pairs the same formula with an actual read of every company's 10-K before calling anything a value pick. See the full method.

Questions

What is the Graham number?

The Graham number is Benjamin Graham's formula for a stock's defensible fair-value ceiling: the square root of 22.5 × earnings per share × book value per share. The constant 22.5 comes from Graham's rule that a sound stock shouldn't trade above 15× earnings or 1.5× book value (15 × 1.5 = 22.5).

Where do I find EPS and book value per share?

Both are on a company's income statement and balance sheet, or any free stock-data site (its "key statistics" or "fundamentals" tab). Use trailing twelve-month (TTM) EPS and the most recent quarter's book value per share for the most current read.

What counts as a good margin of safety?

Graham himself looked for a price at least a third below his estimate of fair value — roughly a 33%+ margin of safety — before he'd consider a stock. The bigger the gap between price and the Graham number, the more room for error if the estimate turns out to be wrong.

Does this work for every stock?

No — it only makes sense for profitable companies with positive earnings and positive book value. It also skips growth, industry, and quality entirely, which is why Graham treated it as a ceiling to screen with, not a full valuation on its own.