Graham Screener: Manual Checklist, Formula, and Workflow

"Price is what you pay; value is what you get." - Benjamin Graham

This page explains a practical Graham Screener process when you do not have an automated screener yet. The goal is simple: shortlist stocks where price may be below conservative value, then pressure-test the idea with risk signals.

What Is a Graham Screener?

A Graham Screener is a rules-based filter set inspired by Benjamin Graham's value discipline: - Favor understandable businesses with real earnings power. - Demand conservative valuation multiples. - Require a margin of safety before considering a position.

Use this page as your one-pager workflow.

Core Formula: Graham Number

Classic formula:

Graham Number = sqrt(22.5 x EPS x BVPS)

ASCII version:

                    __________________________
Graham Number  =   \/ 22.5 x EPS x BVPS

EPS   = earnings per share
BVPS  = book value per share
22.5  = 15 (P/E cap) x 1.5 (P/B cap)

If price is below this level, a stock may be undervalued on a conservative Graham-style lens. Treat that as a starting flag, not a final verdict.

One-Pager Screening Flow (ASCII)

[Universe]
    |
    v
[Quality Filters]
  - positive EPS
  - reasonable debt
  - no obvious accounting red flags
    |
    v
[Value Filters]
  - P/E <= 15
  - P/B <= 1.5
  - price < Graham Number
    |
    v
[Margin of Safety]
  - require discount buffer to value
    |
    v
[Event Risk Check]
  - dilution / short interest / volume spikes / near-lows
    |
    v
[Manual Review + Position Sizing]

Manual Graham Screener Checklist

1. Confirm trailing EPS is positive.
2. Confirm book value is meaningful for the business type.
3. Check P/E <= 15 and P/B <= 1.5 (or stricter if quality is lower).
4. Compute Graham Number and compare with current price.
5. Require a margin-of-safety buffer before a watchlist add.
6. Reject names with balance-sheet stress you cannot explain.
7. Review recent event tables for dilution/sentiment/liquidity pressure.

Where to Run Each Step Internally

Ranking pages (valuation and quality triage)

• Core blend: Composite Ranking
• Balance-sheet angle: Cash Ranking, Net Current Assets, Net Tangible Assets
• Earnings quality context: Earning Metrics (5Y/5Q), Adjusted Earning Power

Chart pages (market-structure context)

• Macro map: Sector Summary Chart
• Peer map: Industry Summary Chart
• Per-symbol deep dive (includes price/market context): Symbol Page

Event tables (risk overlays before entry)

• Dilution trend: Share Changes
• Bearish positioning: Short Interest Changes
• Stress or capitulation zone: Near-Low Closes
• Liquidity shock: Interesting Volume

Quick Example

Assume: - EPS = 4.00 - BVPS = 30.00

Graham Number = sqrt(22.5 x 4.00 x 30.00)
              = sqrt(2700)
              = 51.96

If price is 42, the stock trades below this estimate. Next step is not "buy"; next step is event-risk and balance-sheet review.

Limits of This Method

• Asset-light businesses can look expensive on book value even when healthy.
• Cyclical earnings can make low multiples look safer than they are.
• One-time accounting items can distort EPS and book value.
• No formula replaces due diligence on dilution, financing risk, and liquidity.

Takeaways

• A Graham Screener is a filter process, not a prediction engine.
• Use formula + checklist + event overlays together.
• If a name passes all three, you have a candidate worth deeper work.

Compliance Note

Educational content only; not investment advice.