Benjamin Graham formula

The Benjamin Graham formula is a formula for the valuation of growth stocks.

Not to be confused with Graham number.

It was proposed by investor and professor of Columbia University, Benjamin Graham - often referred to as the "father of value investing". Published in his book, The Intelligent Investor, Graham devised the formula for lay investors to help them with valuing growth stocks, in vogue at the time of the formula's publication.

Graham cautioned here that the formula was not appropriate for companies with a "below-par" debt position: "My advice to analysts would be to limit your appraisals to enterprises of investment quality, excluding from that category such as do not meet specific criteria of financial strength".

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