Graham Number Calculator
Benjamin Graham’s formula for the maximum fair price of a defensive stock.
Graham’s margin of safety
The Graham Number is the maximum price a defensive investor should pay for a stock, derived from earnings and book value. Buying below it builds in Benjamin Graham’s cherished margin of safety.
The formula
Graham Number = √(22.5 × EPS × Book Value per Share). The 22.5 comes from Graham’s rule that P/E × P/B should not exceed 22.5 (15 × 1.5).
Frequently asked questions
Does it work for all stocks?
It suits stable, asset-heavy, profitable companies. It understates value for high-growth or asset-light businesses (like software), where book value is a poor guide.