Price-to-Graham Number (Price/Graham)

Price/Graham expresses the relationship between market price and the Graham Number as a simple ratio. It transforms Graham's absolute fair value into a relative metric that can be compared across companies.

A Price/Graham below 1.0 means the stock passes Graham's combined P/E and P/B test. A ratio of 0.7, for example, means the stock trades at 70% of Graham's estimated fair value - a 30% margin of safety by Graham's standards.

This metric makes it easy to rank and screen large universes of stocks by their distance from Graham's fair value threshold. It is a direct operationalization of the defensive investor criteria from "The Intelligent Investor."

Lower Price/Graham is better. Below 1.0 passes Graham's test; below 0.7 indicates a substantial margin of safety.

Price/Graham compresses two valuation checks (P/E < 15 and P/B < 1.5) into one number. Stocks with very low Price/Graham ratios tend to be asset-heavy, mature businesses with moderate earnings.

This metric inherits all the limitations of the Graham Number. It is most appropriate for traditional industries with tangible assets and stable earnings, not for high-growth or asset-light businesses.

Financials, industrials, and utilities most commonly produce Price/Graham ratios below 1.0. These sectors have the tangible assets and stable earnings Graham's formula rewards.

Technology and healthcare sectors will rarely show Price/Graham below 1.0. This reflects their asset-light models, not necessarily overvaluation.

Emerging markets and value-oriented geographies (Japan, South Korea) tend to have more stocks trading below their Graham Number than the US market.