Benjamin Graham · Graham Number
Takes the geometric mean of EPS and book value per share to produce a conservative price ceiling that folds in both earnings and assets, screening out clearly overpriced traditional value stocks.
- Guide level
- Practical
- Output
- Intrinsic value
Core formula
Graham Number = √(22.5 × EPS × book value per share)How to interpret it
Takes the geometric mean of EPS and book value per share to produce a conservative price ceiling that folds in both earnings and assets, screening out clearly overpriced traditional value stocks.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
It is an upper bound, not a target price, and systematically understates asset-light or high-growth companies.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.