How this calculator works
Explore the historical Graham earnings-growth formula with its bond-yield adjustment, then compare the result with a market price. Growth and yield are entered as percentages. The constants reflect historical assumptions; Graham cautioned against treating a growth formula as a dependable valuation. Treat this as a sensitivity exercise and compare other valuation methods.
Formula
V = EPS × (8.5 + 2g) × 4.4 / Y, where g and Y are percentage numbers, such as 5 and 4.4. Investment margin of safety = (V - market price) / V. The engine stores rates as fractions and converts them inside the formula.
Worked example
EPS of $2, growth of 5% and a 4.4% bond yield give $37. A $29.60 price is 20% below that estimate. EPS of $3 with no growth and a 6.6% bond yield gives $17.
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Frequently asked questions
Is the estimate a reliable target price?
No. Small changes in growth or bond yield can move the result sharply. The constants are historical and do not adapt to business quality or risk.
What yield should I enter?
Supply a current high-grade corporate bond yield consistent with the historical model. The page does not fetch market data.
Why is margin of safety different from upside?
Margin of safety divides the gap by estimated value. Upside divides the same gap by market price, producing a different percentage.