About This Calculator
This calculator implements Benjamin Graham's formula for estimating the intrinsic value of a stock:
V = EPS × (8.5 + 2g)
Where:
- V = Intrinsic value
- EPS = Trailing 12-month earnings per share
- g = Long-term growth rate (as a decimal)
- 8.5 = P/E ratio of a zero-growth company
Graham later revised this formula to include both a risk-free rate and current AAA corporate bond yield:
V = EPS × (8.5 + 2g) × 4.4 ÷ Y
Where:
- 4.4 = Average yield of high-grade corporate bonds in 1962
- Y = Current yield on AAA corporate bonds
This calculator provides both the original and revised formulas to help you make more informed investment decisions.