graham +tweek

Graham Number = Square Root of [22.5 x Earnings Per Share (EPS) x Book Value Per Share (BVPS)] where… Earnings Per Share (EPS) = the average of the past 3 years (this is the original Graham calculation. Many services such as Y-Charts use the trailing twelve month (ttm) earnings without averaging the past 3 years). Book Value Per Share (BVPS) = Shareholder Equity / Total Outstanding Common Shares 22.5 = the number set by Graham; it is the product of his maximum P/E ratio (15) and his maximum Book Value Per Share (1.5). By combining the two into one number (22.5) it allows some “wiggle room” for one or the other to be a little high. The Graham Number is the maximum price to pay for a stock. Now I have further added some ratios to further safeguard a stock pick.

by Rizzuwaasay

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Market capitalization > 500 AND Price to earning < 15 AND Return on capital employed > 22%