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Our Methodology

How we analyze stocks and calculate value scores. Our approach is rooted in Benjamin Graham's time-tested principles from The Intelligent Investor and Security Analysis.

📊 Graham Number

Graham Number = √(22.5 × EPS × Book Value Per Share)

The Graham Number is Benjamin Graham's formula for estimating the maximum fair price for a stock based on its earnings and book value. The constant 22.5 comes from Graham's criteria that a stock should have a P/E ratio no higher than 15 and a price-to-book ratio no higher than 1.5 (15 × 1.5 = 22.5).

When a stock trades below its Graham Number, it may be undervalued. We use this as the foundation for our Top Undervalued Stocks list.

💎 Intrinsic Value (Graham Formula)

V = EPS × (8.5 + 2g) × 4.4 / Y
V
Intrinsic Value
EPS
Trailing 12-month earnings
g
Expected growth rate (%)
Y
Current AAA bond yield

This formula, from Graham's later work, accounts for earnings growth and interest rates. We use it on every stock analysis page and in our Graham Calculator tool.

🛡️ Margin of Safety

Margin of Safety = (Intrinsic Value − Market Price) / Intrinsic Value × 100%

The margin of safety is the gap between what a stock is worth and what it costs. Graham recommended buying only when this margin is at least 30% — your cushion against estimation errors.

≥ 30%
Strong margin — potentially undervalued
10–30%
Moderate margin — fair value range
< 10% or negative
Potentially overvalued — proceed with caution

📡 Data Sources

  • •Financial Data: Alpha Vantage API — real-time and historical stock data including EPS, book value, P/E ratios, dividends, and market cap.
  • •Update Frequency: Stock pages revalidate every 24 hours. Top 10 lists are updated daily via automated pipeline.
  • •Universe: We screen S&P 500 stocks plus popular large-cap and mid-cap securities.

⚠️ Limitations

  • • The Graham Number works best for stable, profitable companies — not for high-growth, pre-profit, or cyclical businesses.
  • • Intrinsic value calculations rely on trailing earnings, which may not reflect future performance.
  • • When EPS or book value data is unavailable, we show "N/A" rather than making assumptions.
  • • Our analysis is educational only — it is not financial advice. Always do your own research.

Try Our Tools

Apply these methods yourself with our free calculators.

Graham CalculatorDCF CalculatorStock Screener

Questions about our methodology? Get in touch.