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.

Use this page as a workflow layer, not as a replacement for the broader Benjamin Graham Guide. If you want the valuation math behind the screen, read the dedicated Graham Formula page first. For Graham's historical role, Columbia Business School's value investing history is a good primary overview.

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.

Before trusting the output, cross-check whether the company's earnings are actually reliable. The formula gets much more useful when combined with Earnings Quality, Basic Earning Power, and Margin of Safety - Graham's Core Rule.

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.