CompanyGraph
Use to find companies where this pattern is active.
Current price is at or below the Graham Number ceiling; OCF is at or above net income for the most recent annual period; shareholders' equity is in the upper part of its industry's equity-to-assets range.
State
Price at or below the Graham Number model ceiling, with OCF-to-net-income high and equity-to-assets high
Emergence
Three readings line up: the Graham Number ratio fires (current price at or below √(22.5 × EPS × BVPS)), OCF-to-net-income is at or above 1.0, and equity is in the upper part of its industry's equity-to-assets range. The Graham Number embeds the model's maximum acceptable multiples (P/E 15 × P/B 1.5); the OCF-to-net-income reading is a cash-vs-accrual ratio for the most recent annual period; the equity ratio is a balance-sheet composition reading.
Limits
The Graham Number is a 1949 rule-of-thumb price ceiling for relatively stable profitable companies; the model does not capture growth, quality, or durability differences and may not apply cleanly to growth, cyclical, or asset-light businesses. The OCF-to-NI reading is one-period and moves with working-capital swings and one-time items. The equity-to-assets reading is a single-date balance-sheet snapshot. None of the three predicts price appreciation or guarantees the Graham framework fits this company.
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Explanation
Three readings co-occur: - Graham Number (graham-number): ratio of √(22.5 × EPS × BVPS) to current price. Score 100 when price ≤ the model ceiling. The 22.5 constant embeds the model's max P/E (15) × max P/B (1.5); the model is a 1949 rule-of-thumb and does not capture growth, quality, or durability. - OCF Relative to Net Income (ocf-to-net-income): operating cash flow as a fraction of net income for the most recent annual period (mapped 0–2.0). The conventional 'earnings quality' framing is interpretive; the formula records the ratio only. - Equity Ratio (ratio-balance-equity): shareholders' equity as a fraction of total assets. The three describe a present configuration; they do not predict price appreciation or claim the company is undervalued in any model not used here.
Interpretation
Co-occurrence of the Graham Number model-ceiling reading with high OCF-to-NI and high equity-to-assets readings. The Graham model is a 1949 rule of thumb; the formulas describe a present configuration and do not predict appreciation.
Required Observations
Graham Number (Intrinsic Value Composite)
The Graham Number model places this company's current price below its intrinsic-value estimate based on EPS and book value.
Operating Cash Flow Relative to Net Income
Operating cash flow is well above reported net income.
Balance Sheet Ratio Compared With the Industry
Shareholders' equity is a larger share of total assets than for most companies in the industry.