Graham Number Calculator — Free Intrinsic Value Tool
Calculate a stock's intrinsic value using Benjamin Graham's formula from The Intelligent Investor. Find stocks trading below their true worth.
Note: Graham's formula is a starting point, not a final answer. It works best for stable, profitable companies with predictable earnings. It's less reliable for high-growth tech stocks, companies with negative earnings, or cyclical businesses. Always combine with other analysis methods.
What is the Graham Number?
The Graham number is a figure used in securities analysis to determine whether a stock is fairly priced. Named after legendary value investor Benjamin Graham — widely considered the father of value investing and Warren Buffett's mentor — the Graham number formula provides a quick way to estimate the maximum fair price for a stock based on its earnings and book value.
Benjamin Graham introduced this concept in his landmark books Security Analysis (1934) and The Intelligent Investor (1949). His approach to investing emphasized buying stocks at prices significantly below their calculated intrinsic value — a concept he called the margin of safety.
How the Graham Number Formula Works
The Graham number calculator above uses Graham's intrinsic value formula: V = (EPS × (8.5 + 2g) × 4.4) ÷ Y, where:
- EPS — Trailing twelve months earnings per share
- g — Expected annual growth rate over the next 7-10 years
- 8.5 — The P/E ratio Graham assigned to a zero-growth company
- 4.4 — The average AAA corporate bond yield when Graham wrote the formula
- Y — The current AAA corporate bond yield (adjusts for interest rate environment)
This Benjamin Graham calculator modernizes the original formula by letting you input the current AAA bond yield, making it relevant for today's interest rate environment. When interest rates rise, the intrinsic value decreases — reflecting the fact that bonds become a more attractive alternative to stocks.
When to Use the Graham Number Calculator
✅ Best For
- • Stable, profitable companies with consistent earnings
- • Blue-chip and dividend-paying stocks
- • Companies with positive EPS and predictable growth
- • Quick screening before deeper analysis
- • Comparing intrinsic value across similar companies
⚠️ Limitations
- • Not reliable for high-growth tech stocks
- • Doesn't work for companies with negative earnings
- • Less accurate for cyclical businesses
- • Growth rate estimate is subjective
- • Should be combined with other valuation methods like DCF analysis
Graham Number vs. Other Valuation Methods
While the Graham number formula is excellent for quick valuation screening, experienced investors combine it with multiple approaches. The DCF calculator provides a more detailed cash-flow-based valuation. The P/E ratio analyzer helps compare valuations across sectors. Our free stock screener lets you filter stocks by multiple fundamental metrics at once.
Benjamin Graham himself advocated using multiple criteria before buying any stock. In The Intelligent Investor, he recommended that defensive investors look for companies with adequate size, strong financial condition, earnings stability, a dividend record, moderate P/E ratios, and moderate price-to-book ratios — not just a favorable Graham number.