I am having issues evaluating stock prices using the Graham Number, what am I doing wrong ?


I will use two stocks in my portfolio, and i use Graham’s suggested Book Value Multiplier of 1.5 and EPS Multiplier of 15. Starting with PAA: Using the current stock price of $15.10, book value of $14.67 and TTM EPS of 1.34, the Graham Number comes out to be $21.03 (-28% undervalued). Okay sweet, that seems realistic and in line with other valuations that i have done for the stock (side note my price target is $20.) Now on to Apple: current stock price of $194.93, TTM EPS of 6.12 and book value of $4….i get a Graham number of $23.47…showing the stock is overvalued by 730%….to me this can’t be correct. Am i doing something wrong here by not adjusting the given book value multiplier of 1.5 and the EPS multiplier of 15? Any help here is much appreciated!


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