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Graham Fair Price Calculator

Estimate a stock's fair price with Benjamin Graham's two formulas: the classic Graham Number, based on earnings and book value per share, and the revised formula, which adds growth and interest rates.

Stock data

Graham Number (EPS and BVPS)

Revised formula (growth)

Current share price ($)

Optional. Used to compare with the fair price.

Earnings per share – EPS ($)

Trailing twelve-month net income divided by shares outstanding.

Book value per share – BVPS ($)

Shareholders' equity divided by shares outstanding.

Expected earnings growth (% per year)

Your estimate for the next 7 to 10 years. It can be negative.

Current AAA corporate bond yield (%)

Graham's benchmark rate. Outside the US, use an equivalent long-term rate.

Graham's two formulas

Graham Number. Graham suggested never paying more than 15 times earnings and 1.5 times book value. Multiplying both limits gives 22.5, which leads to the fair price:

Fair price = √(22.5 × EPS × BVPS)

Revised formula. In 1974, Graham proposed a version that rewards earnings growth and adjusts for interest rates:

Fair price = EPS × (8.5 + 2 × g) × 4.4 ÷ Y

8.5 is the P/E Graham considered fair for a company with no growth.
g is the expected annual earnings growth, in %, for the next 7 to 10 years.
4.4 was the US AAA corporate bond yield in 1962; Y is today's yield.

Worked example

A stock with EPS of $3.20 and BVPS of $20.00 has a Graham Number of √(22.5 × 3.20 × 20.00) = √1,440 = $37.95.

With the revised formula, 5% growth and a 5% bond yield give 3.20 × (8.5 + 2 × 5) × 4.4 ÷ 5 = $52.10.

When the formula misleads

Loss-making companies or negative equity: the formula does not apply.
Earnings boosted by a one-off event, such as an asset sale: use recurring earnings.
Cyclical companies, such as commodities: use average earnings over several years.
Fast-growing companies with little equity always look expensive on the Graham Number.

Frequently asked questions

Where do I find EPS and book value per share?

In the company's quarterly and annual reports, on its investor relations site, and on most stock quote sites. Use trailing twelve-month EPS.

Which Graham formula should I use?

The Graham Number only needs published figures. The revised formula depends on your growth estimate and the bond yield, so it changes a lot with small adjustments.

Is the fair price a buy recommendation?

No. It is a simple estimate for study, based on the numbers you enter. Investment decisions should consider the company's health, its industry and your own profile.

Educational tool. Calculations run in your browser and are not investment advice.