Graham Number Calculator - EPS Value Screen

A graham number calculator estimates a conservative per-share value for a stock by combining earnings per share, book value per share, and the classic 22.5 Graham constant. Use it when you are screening mature profitable companies, checking whether market price sits below a formula value, comparing several stocks with the same method, or documenting why a stock deserves deeper research.

• • First-pass value screen: Enter EPS and book value per share to see whether the stock clears a simple asset-and-earnings test before you spend time on a fuller model.
• • Price comparison: Add the current share price to calculate the dollar gap and percent margin of safety against the formula value.
• • Watchlist review: Run the same inputs across companies in similar industries so the comparison is based on one consistent rule.
• • Research note support: Use the output as a documented screen, then explain whether earnings quality, debt, or business risk supports more detailed valuation work.

The result is not a target price, forecast, or recommendation. It is a quick screen built from accounting inputs. That makes it most useful for companies where reported earnings and book equity still describe the business reasonably well, such as asset-heavy or stable firms. Use the graham number calculator output as a starting screen, not a conclusion.

The calculator intentionally asks for per-share inputs. Do not enter total net income or total shareholders' equity unless you have already divided them by the correct share count. If you need to build the EPS input from filing figures first, use the related EPS workflow before entering the result here.

If you need to derive earnings per share before using this screen, the EPS Calculator can calculate basic and diluted EPS from income and share-count inputs.

The formula multiplies EPS and book value per share, applies the 22.5 constant, and takes the square root so the answer remains a per-share dollar value.

• EPS: Earnings per share for the chosen period. Use a positive value, and keep the period consistent with the filing or data source you rely on.
• Book value per share: Common shareholders' equity divided by common shares outstanding. Use a per-share amount, not total equity.
• 22.5: A dimensionless constant commonly explained as 15 times earnings and 1.5 times book value.
• Current share price: Optional market price used only for the gap, ratio, and margin-of-safety outputs.

The price gap is calculated as Graham Number minus current share price. A positive gap means the market price is below the formula value. A negative gap means price is above the formula value. The margin of safety divides that gap by the Graham Number, so a $55 price against a $67.08 formula value becomes 18.01 percent.

Because this is a square-root formula, EPS and book value per share must both be positive. A company with losses, negative equity, or near-zero book value needs a different valuation approach. The result also changes directly with accounting inputs, so stale data can make the screen misleading.

According to Corporate Finance Institute, the Ben Graham Number is the square root of 22.5 times earnings per share times book value per share, and 22.5 comes from 15 times 1.5.

For a fuller cash-flow view after the formula check, the DCF Calculator models projected free cash flow, terminal value, and intrinsic value per share.

A useful Graham Number review depends on understanding what the inputs measure and what the output leaves out.

Treat the output as one data point in a broader review. The model does not forecast revenue growth, normalize cyclical earnings, adjust for off-balance-sheet obligations, or decide whether book equity is economically useful. It is best paired with cash-flow valuation, risk analysis, and a review of the notes in the company's filing.

The formula is also sensitive to accounting quality. One-time gains can inflate EPS, while write-downs can reduce book value. If the latest period is unusual, consider whether a multi-year average or a different model would better represent the business.

When one year's EPS looks unusual, the EPS Growth Calculator helps compare beginning and ending EPS before you rely on a single period.

Use the calculator as a consistent stock-screening worksheet, then verify the inputs before drawing conclusions.

1. 1 Collect EPS: Use diluted or basic EPS from the same source you use in your research notes. Avoid mixing trailing, annual, and forward periods without labeling the choice.
2. 2 Collect book value per share: Use common equity book value per share, or calculate it from common shareholders' equity and common shares outstanding.
3. 3 Enter market price: Add the current share price if you want the price gap, ratio, and margin-of-safety outputs.
4. 4 Read the result note: Check whether price is below or above the formula value, then decide what follow-up research is needed.
5. 5 Compare only similar situations: Use the same EPS basis and book-value basis when comparing companies, and avoid comparing asset-light firms with asset-heavy firms as if the inputs meant the same thing.

A bank with EPS of $6.40, book value per share of $72, and a $90 share price returns a Graham Number of about $101.82. That does not mean the stock should be bought. It means the price is below this screen, so credit quality, capital ratios, deposit risk, and earnings stability deserve the next review.

Before treating a discount as attractive, the Beta Stock Calculator can add market-risk context to the valuation review.

The calculator is most helpful when it keeps a valuation review disciplined and easy to repeat.

• • Fast per-share check: It turns two filing inputs into a dollar value that can be compared with the current quote.
• • Clear margin language: The price gap and margin-of-safety outputs make the comparison easier to communicate in a watchlist or research note.
• • Consistent screening: Using one formula across a peer group prevents each stock from being judged by a different shortcut.
• • Input discipline: The page forces EPS and book value per share to stay separate, which reduces a common mistake of entering total company figures.
• • Follow-up focus: A passing screen points to the next questions: earnings durability, balance-sheet quality, business risk, and whether book value is economically meaningful.

This screen is deliberately narrow. That is a benefit when you need a quick, comparable check, but it is a limitation if you need a complete investment case. A stock can trade below the Graham Number because the market expects future earnings to fall or because reported book value will not translate into shareholder value.

For income-oriented stocks, compare the Graham Number with dividend yield and payout information. A low formula price is not enough if dividends are unsupported or if retained earnings are not producing durable returns.

For income stocks, the Dividend Yield Calculator can check whether the current price also produces a useful cash yield.

Several real-world factors can make the Graham Number more or less useful for a specific company.

• • The calculator rejects zero or negative EPS and BVPS because the square-root result would not provide a useful Graham Number.
• • The formula does not include growth, cash-flow timing, cost of capital, competitive position, or management quality.
• • The output should not be used as a stand-alone buy or sell signal, especially for distressed, high-growth, or intangible-heavy companies.

FINRA cautions that book value is less meaningful when important intangible assets are excluded, and that valuation work should compare context such as industry norms, history, and qualitative factors. That caution matters here because the Graham Number gives book value a major role.

The SEC filing context matters too. EPS comes from the income statement, while shareholders' equity comes from the balance sheet. If those inputs are pulled from different dates, adjusted data sets, or inconsistent share counts, the formula may look precise while the underlying comparison is weak.

According to FINRA, book value for stocks is total assets minus total liabilities, and book value is less meaningful when valuable intangible assets are excluded.

According to U.S. Securities and Exchange Commission, income statements report earnings per share and balance sheets report assets, liabilities, and shareholders' equity.

If dividends are central to the thesis, the Dividend Discount Model Calculator estimates value from payout assumptions instead of book value.