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 a large share of total assets.
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 a large share of total assets. 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.
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
The Graham Number model places this company's current price below its intrinsic-value estimate based on EPS and book value.
Ocf To Net Income
How operating cash flow compares to reported net income for the latest year.
Ratio Balance Equity
Specific balance-sheet ratio benchmarked against industry (which ratio depends on the instance)