i What this calculator does
Quick answer: Apply Benjamin Graham's defensive valuation formula to any share and see the maximum price his criteria would justify. With the default inputs (earnings per share 15.20, book value per share 15.68), it returns graham number of R73.23.
Benjamin Graham proposed a blunt ceiling for a defensive investor: a share should not cost more than the square root of 22.5 times earnings per share times book value per share. The 22.5 comes from his limits of 15 times earnings and 1.5 times book.
It is deliberately conservative and it rules out most of the market, which was the point. Treat it as a screen for asset-backed value rather than as a valuation, because it ignores growth, cash flow and everything qualitative.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Graham Number Calculator
Defaults are supplied throughout, which means the calculator is useful before you have touched it.
- 1. Earnings Per Share (R)
- 2. Book Value Per Share (R)
- 3. Current Share Price (R)
- 4. Margin of Safety (%) Graham suggested buying well below the ceiling
The result panel reports:
- Graham Number Maximum defensible price
- Buy Below After a
Alongside the headline figures, the calculator reports p/e ratio, price to book, p/e x p/b, earnings per share. Those are the numbers that usually explain why the headline result came out where it did.
Below the figure, the calculation is shown in full, so you are not asked to take it on faith.
Common results
What the calculator returns as the earnings per share changes, with every other input at its default (book value per share 15.68, current share price 185.50, margin of safety 25).
| Earnings Per Share | Graham Number | Buy Below | Current Price |
|---|---|---|---|
| R4 | R37.57 | R28.17 | R185.50 |
| R10 | R59.40 | R44.55 | R185.50 |
| R20 | R84.00 | R63.00 | R185.50 |
| R40 | R118.79 | R89.10 | R185.50 |
| R75 | R162.67 | R122.00 | R185.50 |
| R150 | R230.04 | R172.53 | R185.50 |
Figures used in this calculator
The South African constants this calculator relies on, with the page that holds the current value and the date it was last verified.
- Company tax: 27%. Source: Company Tax Rates Reference (verified 29 September 2026).
- Securities Transfer Tax: 0.25% on share purchases. Source: JSE Trading Cost Schedule (verified 27 September 2026).
- JSE trading hours: 09:00 to 17:00 SAST. Source: JSE Trading Hours and Holidays (verified 27 September 2026).
How the calculation works
Four inputs drive the result: Earnings Per Share, Book Value Per Share, Current Share Price and Margin of Safety. Margin of Safety: Graham suggested buying well below the ceiling. The the formula is sqrt(22.5 x EPS x book value per share). The substitute is sqrt(22.5 x R15.20 x R15.68). The result is R73.23. The margin of safety is R73.23 x (1 - 25%) = R54.92. The breakdown also lists earnings per share, book value per share, graham number and margin of safety.
A worked example in rand
Run it with the inputs it opens with, earnings per share R15.20, book value per share R15.68, current share price R185.50 and margin of safety 25%, and the graham number comes out at R73.23, maximum defensible price. The other figures are buy below R54.92 and current price R185.50. Now set the earnings per share to 30.4: the graham number moves from R73.23 to R103.56 and the buy below moves from R54.92 to R77.67. The current price does not change, because it does not depend on that input.
How to read the result
For the default case the verdict is: "The price is 61% above the Graham number. His criteria would exclude it." Read it as a flag rather than advice: it tells you where the numbers sit relative to the usual rules of thumb. A single ratio is a starting question, not an answer: cheap can mean undervalued or deservedly cheap, and only the sector comparison and the earnings trend separate the two.
The South African angle
Using the graham number calculator from South Africa adds a few local facts to the arithmetic. Resource companies dominate the JSE All Share, which gives the index a cyclical character and makes sector comparison more important than for a US index when judging a ratio. JSE shares are quoted in cents, so a share showing 12,500 is R125, and the calculators here expect rand; dividing the quote by 100 before entering it is the most common slip. A tax-free savings account can hold JSE ETFs but not individual shares, which is why valuation of single shares matters most for taxable accounts. The graham number calculator draws on the same figures, which are kept on the JSE indices reference and updated as they change.
Spotted an outdated figure? If a rate, limit or formula in this calculator no longer matches its source, email us the page and the source. A material correction is dated on the Updates Log.
Frequently asked questions
Where does 22.5 come from?
Graham set two limits for a defensive investor: a P/E no higher than 15 and a price to book no higher than 1.5. Multiplying those gives 22.5, and the formula takes the square root of 22.5 times EPS times book value to produce a maximum price.
Is the Graham number still useful?
As a screen, yes. As a valuation, it was never meant to be one. It systematically excludes companies whose value is in intangibles, brands or growth, which is most of the modern market. It finds asset-backed value and nothing else, which is exactly what Graham wanted.
Why does almost nothing pass?
Because the criteria are severe by design. Graham was writing for an investor who wanted to avoid permanent loss rather than maximise return. On the JSE it tends to surface cyclical resource companies and occasionally financials near the bottom of a cycle.
What margin of safety should I use?
Graham talked about buying at a meaningful discount to the calculated value rather than naming one figure. Twenty-five to fifty percent is the range most followers use. The purpose is to absorb the error in your own estimates, not to predict the price.
Can I use headline earnings?
For a JSE company, headline earnings per share is usually the better input, because it strips out capital items that distort a single year. Using a three-year average of headline EPS is closer to what Graham actually recommended.
Does this replace other valuation work?
No. It is a filter that says no to most things quickly. Anything that passes still needs the balance sheet, the cash flow and the reason the market has priced it where it has.
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