Graham Number Calculator
Benjamin Graham's classic formula for a quick intrinsic-value screen. Enter earnings per share, an expected growth rate and today's AAA bond yield to get a conservative fair value in seconds.
V = EPS × (8.5 + 2g) × 4.4 / Y, the interest-rate-adjusted revision. It's a fast, conservative screen — not a precise valuation.
Worked example
With EPS of $6.00, expected growth of 8% and an AAA corporate bond yield of 4.5%, the formula gives V = 6 × (8.5 + 2×8) × 4.4 / 4.5 ≈ $143.7. If the stock trades below that, it passes Graham's screen; if well above, it is expensive by this conservative yardstick. Because the “2g” term is linear and aggressive, growth above 15% is capped to avoid over-inflating the value.
The formula
This calculator uses Graham's interest-rate-adjusted revision: V = EPS × (8.5 + 2g) × 4.4 / Y, where 8.5 is the base P/E of a no-growth company, g is expected annual growth in percent, 4.4 is the AAA yield of Graham's era used as a normalising constant, and Y is today's AAA corporate bond yield. Adjusting for current rates keeps the model honest when bond yields are far from their 1960s level.
When to use it — and when not to
The Graham number is a screen, not a precise valuation. It works best for stable, profitable, dividend-paying companies with steady earnings. It is a poor fit for high-growth, asset-light or cyclical businesses, where a DCF is more appropriate. Treat a pass as “worth a closer look,” not a buy signal.
Frequently asked questions
- What is the Graham number?
- It is a conservative estimate of a stock's intrinsic value from Benjamin Graham, the father of value investing, based on earnings and expected growth adjusted for interest rates.
- Where do I find the AAA bond yield?
- Moody's Seasoned Aaa Corporate Bond Yield is published by the U.S. Federal Reserve (FRED). Any recent value in the low-single-digit-percent range works for a screen.
- Why is growth capped at 15%?
- The linear 2g term over-inflates intrinsic value at high growth rates, which is unrealistic. Capping growth keeps the screen conservative, as Graham intended.
- Is a stock below its Graham number a buy?
- Not automatically. It has passed one conservative screen. Confirm with a DCF, the balance sheet and the business quality before acting.
Screen your whole watchlist at once
TrimmTrack computes the Graham number alongside DCF and reverse-DCF for every ticker you follow, with EPS pulled in automatically.