how does the graham number work in value investing 
the graham number takes a company s per share metrics and normalizes it based on a recommended upward limit for value investors of 15x p e and 1 5x p b who was benjamin graham benjamin graham is one of the founding fathers of value investing and a financial guru to many famous value investors such as warren buffett graham s philosophy was to closely examine a company s financial statements to identify undervalued opportunities his book the interpretation of financial statements is widely regarded as foundational for value investing the bottom linethe graham number measures a stock s fundamental value by taking into account the company s eps and bvps it represents the upper bound of the price range that a defensive investor should pay for a stock and it suggests that any stock price below the graham number is undervalued and thus worth investing in correction march 21 2024 this article has been corrected to state graham s belief that the price to book ratio should not be over 1 5x 