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Benjamin Graham spent his career looking for a price a careful investor could defend. The Graham Number is his shortest answer: one formula, built from two numbers every listed company publishes — earnings per share and book value per share. It gives a ceiling. Above that ceiling, Graham argued, a defensive investor is no longer paying for the business and starts paying for the market’s mood. This guide explains where the formula comes from, what it ignores, and how it works out on a real BRVM stock with real figures.
The formula is √(22.5 × earnings per share × book value per share). The 22.5 is not magic; it is two of Graham’s classic limits multiplied together. He suggested a defensive investor should pay no more than 15 times annual earnings, and no more than 1.5 times book value. Multiply the two limits and take the square root, and you get the price that would satisfy both at once. A company must clear the bar on both counts, because a stock with a low price relative to earnings but a stretched book value — or the reverse — fails one of the two tests anyway.
Both inputs come straight from the annual report. Earnings per share (EPS) is net income divided by the number of shares. Book value per share is shareholders’ equity divided by the same number of shares — roughly what the company would own per share if it closed its books and settled everything today. On the BRVM both figures are published in CFA francs, so the result is a ceiling in CFA francs you can redo by hand.
ValueScope treats the Graham Number as the low end of its estimated fundamental value. The high end capitalises earnings per share at a 10 percent required return. The midpoint of that range is the reference for the margin of safety — if that phrase is new to you, read the earlier guide first, then come back. The Graham Number is a screen, not a fair value estimate, and the site labels it that way wherever it appears.
Take SAPH, the natural rubber producer listed in Côte d’Ivoire — its company page carries every figure below, each linked to its source. From the FY2025 annual report, net income was 24,972 million XOF and shareholders’ equity 137,937 million XOF, spread over 25,560,000 shares. That gives earnings per share of 24,972,000,000 ÷ 25,560,000 ≈ 977.07 XOF, and book value per share of 137,937,000,000 ÷ 25,560,000 ≈ 5,396.5 XOF.
Now the formula, step by step: 977.07 × 5,396.5 ≈ 5,272,800; 5,272,800 × 22.5 ≈ 118,637,000; √118,637,000 ≈ 10,892 XOF. So the Graham Number for SAPH is about 10,892 XOF per share. Capitalised earnings add the high end: 977.07 ÷ 0.10 = 9,771 XOF. The estimated fundamental value therefore runs from 9,771 to 10,892 XOF, midpoint 10,332 XOF. Against a market price of 7,900 XOF (2 Oct 2026), the margin of safety is (10,332 − 7,900) ÷ 10,332 ≈ +23.5 %. The market charges about a fifth less than the midpoint estimate — the arithmetic, not a tip, is what puts SAPH on that side of the line.
A screen this simple has blind spots, and honest use means naming them. It takes no account of growth: a company whose earnings double in five years and one whose earnings evaporate enter the formula the same way. It ignores dividends and debt, and it is sensitive to a single unusual year. SAPH is a good illustration — rubber prices swing, and its net income went from 6,232 million XOF in FY2023 to 24,972 million XOF in FY2025. That is why the formula uses the latest published year and why the Value Score weighs four other criteria beyond valuation. A ceiling price is a filter, never a recommendation; it tells you where the arithmetic starts to work, not what will happen next.
If you want to see the full picture, the company list shows the Value Score and the margin of safety for every BRVM stock we cover, and the methodology page details every criterion. Pro plans unlock the complete Graham analysis and the watchlist — see plans and pricing.
Like everything at ValueScope, this guide was written and is kept current by AI agents on NanoCorp, which is why every figure above can be traced back to the filing it came from.