Imagine you’re at a flea market.

You spot a dusty old painting tucked away behind a stack of junk.

The vendor’s asking $20, but you’ve got a hunch.

Something about it feels…valuable.

Do you buy it? Or do you walk away?

Investing in stocks can feel the same.

Every stock has a price tag, but how do you know if it’s worth it?

This is where the Graham Number can come to your aid.

It's a tool that helps you figure out if you’ve got a hidden gem or just another overpriced trinket.

The cool part is, you don't need to be an expert to be able to use it.

You can set up a simple Graham Number stock screener in Excel or Google Sheets to spot these “hidden gems” in seconds.

It’s not some fancy Wall Street trick.

It's just good, old-fashioned value investing, made easier.

We’ll break it all down step by step.

By the end, you’ll have a screener that does the hard work for you.

What is the Graham Number?

The Graham Number is like a gut-check for investors.

It’s a simple formula designed to tell you if a stock might be undervalued or overpriced based on two key numbers: a company’s earnings per share (EPS) and its book value per share (BVPS).

It is basically a way to measure whether the stock price actually lines up with the company’s financial fundamentals.

Here’s the formula:

Graham Number = √(22.5 × EPS × BVPS)

Why 22.5? That number comes straight from Benjamin Graham, the father of value investing.

He believed a company’s stock was fairly valued if its price-to-earnings (P/E) ratio was no more than 15 and its price-to-book (P/B) ratio was no more than 1.5.

Multiply those two limits together, (15 × 1.5), and you get 22.5 – a built-in safety margin to avoid overpaying.

Example

Take Apple in 2022. It had an EPS of 6.15 and a BVPS of 3.12.

Plugging those numbers into the formula:

Graham Number = √(22.5 × 6.15 × 3.12) = $20.77

Now, compare that to Apple’s actual stock price at the time. If the stock price was much higher than $20.77, it could mean Apple was overvalued according to Graham’s criteria. If it was lower, it might be undervalued (a potential buying opportunity).

Why Did Graham Develop This?

Ben Graham wasn’t about chasing hot stocks or quick wins. He built his strategy around risk avoidance.

The Graham Number reflects his "margin of safety" philosophy: give yourself a cushion because markets are unpredictable, and people make mistakes.

Anchoring decisions to solid financial data allows you to reduce the chances of overpaying for a stock that might not deliver.

What Makes the Graham Number So Useful?

It's not perfect. It does not work for all types of companies (like high-growth tech firms with little tangible book value).

But for traditional industries or stable, mature companies, it’s a reliable way to weed out overpriced stocks and focus on those worth a closer look.

Why Use a Stock Screener for the Graham Number?

Calculating the Graham Number for one stock is easy.

Two stocks? Still manageable.

But what happens when you’re analyzing ten? Fifty? A hundred?

That’s where the wheels fall off.

Imagine manually gathering the earnings per share (EPS) and book value per share (BVPS) for every stock you’re interested in.

You’d have to dig through financial reports, check websites like Yahoo Finance or Google Finance, and punch the numbers into a calculator – over and over again.

By the time you’re done, the market might’ve already shifted, making your analysis outdated.

It’s a nightmare, especially when you’ve got better things to do.

Where a Graham Number Stock Screener Comes In

A stock screener simplifies this entire process. It takes what used to be a grind and turn it into a seamless, automated workflow.

Learn more about building custom stock screeners in Excel with this detailed guide.

Here’s what you get:

1. Real-Time Data

Stock prices, EPS, and BVPS change constantly. With a screener, you don’t have to manually refresh your numbers.

2. Quick Comparisons

Instead of calculating the Graham Number one stock at a time, a screener lets you calculate it for dozens – or even hundreds – of stocks in seconds. You can spot undervalued stocks faster than ever.

3. Custom Filters

Want to focus on stocks with a Graham Number below their current price? Or maybe stocks in a specific industry? A screener lets you add filters to highlight exactly what you’re looking for. This saves you from wasting time on irrelevant results.

Explore how to create a dividend stock screener to expand your analysis toolkit.

4. Conditional Formatting

Make it visual. Highlight undervalued stocks in green, overvalued ones in red. This makes it easy to see potential winners at a glance, no number crunching required.

5. Consistency and Accuracy

Humans make mistakes. Automated tools don’t (at least, not often). Using a screener enables you to minimize errors in calculations and thus ensure your analysis is consistent across the board.

Step-by-Step: How to Create a Graham Number Stock Screener

1. Locate a Stock List

The first step is finding a list of stocks you want to analyze. You can:

• Use an online stock screener like Yahoo Finance or Google Finance to pull industry-specific lists.
• Search manually on Google (e.g., “Top Semiconductor Stocks”).
• Focus on stocks you already follow or are curious about.

2. Gather Financial Data

You’ll need the following data points for each stock:

• Earnings Per Share (EPS)
• Book Value Per Share (BVPS)

With the Wisesheets plugin for Excel or Google Sheets, this step is effortless:

Find out how to pull live stock prices into Google Sheets for your analysis.

• Use =WISE("ticker", "graham number", "ttm") to calculate the Graham Number instantly.

Or fetch individual values:

• =WISE("ticker", "EPS", "ttm") for EPS.
• =WISE("ticker", "BVPS", "ttm") for BVPS.

Example: For Apple (AAPL), enter =WISE("AAPL", "graham number", "ttm"), and the value appears.

3. Refresh the Stock Data

Financial data changes frequently.

To keep your screener accurate:

Use the Wisesheets Refresh Button (found at the top-right of the add-on menu) to update all stock data instantly.

4. Add Conditional Formatting (Optional)

Make your screener more intuitive by adding visual cues:

• Highlight stocks where the Graham Number > Current Stock Price (potentially undervalued) in green.
• Highlight stocks where the Graham Number < Current Stock Price (potentially overvalued) in red.

How to Add Conditional Formatting in Google Sheets/Excel:

1. Select the column with Graham Numbers.
2. Go to Format > Conditional Formatting.
3. Set rules based on your criteria (e.g., if Graham Number > Stock Price).

5. Filter Through the Stock Data

Now that your screener is set up, it’s time to find opportunities:

• Use data filters to quickly locate undervalued stocks.
• Filter stocks by industry, market cap, or any criteria that align with your investing strategy.

Learn how to gather historical stock data using Excel’s Stockhistory function.

Example: Filter for stocks with a Graham Number at least 10% higher than their current price to identify strong candidates.

Tips for Using Your Graham Number Stock Screener Effectively

A Graham Number stock screener is a powerful tool, but like any tool, it works best when used wisely.

Here are some tips to help you get the most out of it:

1. Cross-Reference with Industry Averages

The Graham Number gives you a snapshot of a stock’s valuation, but context matters. Always compare your results with industry averages:

• Is the stock undervalued relative to its peers?
• Does it stand out as a potential bargain in its sector?

For example, a retail company’s Graham Number might look great, but if the entire sector is underperforming, it could be a red flag.

2. Don’t Rely on the Graham Number Alone

The Graham Number is just one piece of the puzzle. Combine it with:

• Management Quality: Look at leadership stability and past performance.
• Industry Trends: Is the sector growing, stable, or in decline?
• Other Metrics: Ratios like P/E, ROE, or dividend yield can provide additional insights.

Use the screener as a starting point, then dig deeper before making any decisions.

3. Update Your Data Regularly

Stock fundamentals are not static. They change with every earnings report, market shift, or major event. A stock that looked undervalued yesterday might not be today.

Make it a habit to refresh your screener’s data regularly, especially if you’re analyzing stocks over time.

4. Customize Your Screener

Tailor your screener to your strategy. For example:

• Focus on specific sectors (tech, energy, etc.).
• Highlight stocks with a Graham Number at least 20% above their current price.
• Add conditional formatting for quick visual cues.

5. Be Patient

Value investing is a long game. The screener will help you identify opportunities, but not every stock flagged as “undervalued” is an instant winner.

Take your time, do your research, and only invest when you’re confident.

FAQs About the Graham Number and Stock Screeners

What is the Graham Number, and how reliable is it?

The Graham Number is a formula designed by Benjamin Graham to help investors quickly determine if a stock is undervalued or overvalued based on two key metrics: earnings per share (EPS) and book value per share (BVPS). It’s a simple and effective tool for value investors focused on minimizing risk.

However, it’s not foolproof. The Graham Number works best for stable, established companies with predictable earnings and tangible assets. For companies in volatile industries or those with high growth potential but minimal current earnings (like many tech firms), it may not provide an accurate valuation. Use it as a starting point, not the final word.

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Can I use the Graham Number for growth stocks?

Not really. The Graham Number is tailored for value investing, emphasizing a margin of safety and focusing on companies with strong current fundamentals. Growth stocks, on the other hand, often trade at high multiples because their value lies in future potential rather than current earnings or assets.

If you’re analyzing growth stocks, you might want to rely on other metrics, like price-to-sales (P/S) ratios, PEG ratios (price/earnings-to-growth), or even discounted cash flow (DCF) models to assess their potential.

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What additional tools can I pair with the screener?

A Graham Number screener is powerful on its own, but pairing it with other tools can provide deeper insights:

• P/E and P/B Ratio Comparisons: Use these to verify the stock’s valuation beyond the Graham Number.
• Technical Analysis Tools: For understanding market trends and entry/exit points.
• Wisesheets Add-On: Automates real-time data fetching, keeping your screener accurate and saving time.
• Yahoo Finance or Google Finance: For broader company overviews, news, and historical data.
• Industry-Specific Data: Tools like Morningstar or Seeking Alpha can provide in-depth reports on sectors and companies.

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Build Confidence with the Graham Number Stock Screener

The stock market’s a battlefield, and most people are swinging blind.

But not you. Not anymore, at least.

The Graham Number stock screener doesn’t give you all the answers, but it asks the right questions.

Is this stock overpriced? Is it worth the risk?

It helps you see through the clutter and figure out which stocks are worth a closer look.

It’s not a crystal ball, but it gives you a solid starting point.

From there, it’s up to you to dig into the details, learn about the companies, and decide where to place your bets.

Stay sharp, stay curious, and always keep your eye on the bigger picture.

That is how you turn data into decisions.

Get Instant Graham Numbers with Wisesheets