Graham Number

Calculate the Graham Number, a conservative estimate of a stock’s fair value based on its earnings and book value, as devised by Benjamin Graham.

The Graham Number is intended as an upper bound on the price a defensive investor should pay for a stock. It is most meaningful for stable, profitable companies with positive book value - for companies with negative earnings or negative book value the result is not meaningful (the square root of a negative number is undefined and will show up as NaN).

The formula is as follows:

Also known as: Graham fair value.

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Calculate the Graham Number in Python

The Graham Number is available in the Models module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_graham_number as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

toolkit.models.get_graham_number()

Which returns:

Parameters

get_graham_number accepts the following parameters:

• diluted (bool, optional): Whether to use diluted shares in the calculation. Defaults to True.
• trailing (int | None, optional): The trailing period to use for the calculation. Defaults to None.
• rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
• growth (bool, optional): Whether to calculate the growth of the values. Defaults to False.
• lag (int | list[int], optional): The lag to use for the growth calculation. Defaults to 1.
• standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.

Related Models

The Models module page introduces the module, and the sidebar lists all of its functions.