Graham Number, reflects how the market prices the company relative to its financial performance. Quarterly (Q) scope increases short-term volatility visibility. In absolute-number format, scale differences must be normalized across periods. This is a derived metric; formula assumptions and scope must be validated before interpretation. Graham Number can carry different thresholds depending on the company’s operating cycle.
SQRT(22.5 * EPS * Book Value Per Share)
How to Interpret
High Value
A high Graham Number level may point to strong growth expectations or premium pricing risk. A sustained high Graham Number can shift expectations around the firm’s cost of capital.
Low Value
A low Graham Number level may imply relative cheapness or weaker market expectations. If Graham Number remains depressed, investors may revise forward assumptions downward.
Where It Is Used
Used in relative valuation, historical range comparison, and peer multiple benchmarking workflows. graham number is more reliable when interpreted with sector peers. Graham Number should be paired with at least one complementary quality metric in decision filters.