Graham's number

What is Graham's number?

Graham's Number is one of the strategies used to find undervalued stocks. This metric takes into account earnings per share and book value of the company and is calculated by the formula:

√ (22.5 * EPS * Book value per share)

What does Graham's number mean?

The value of Graham's number represents the upper threshold of a price an investor should pay for a specific company. Graham's number is used by value investors to find companies that are below their Graham's number value.