The Graham number or Benjamin Graham number is a figure used in securities investing that measures a stock's so-called fair value.
The final number is, theoretically, the maximum price that a defensive investor should pay for the given stock.
Put another way, a stock priced below the Graham Number would be considered a good value, if it also meets a number of other criteria.
Graham writes:[2] Current price should not be more than 11⁄2 times the book value last reported.
As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5.
Consequently, the formula for the Graham number can also be written as follows: