Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.
As of today (2024-04-26), the stock price of Tower Semiconductor is $32.36. Tower Semiconductor's graham number for the quarter that ended in Dec. 2023 was $30.87. Therefore, Tower Semiconductor's Price to Graham Number ratio for today is 1.05.
The historical rank and industry rank for Tower Semiconductor's Graham Number or its related term are showing as below:
TSEM'
s Price-to-Graham-Number Range Over the Past 10 Years
Min: 0.79 Med: 1.27 Max: 1.5
Current: 1.03
During the past 13 years, the highest Price to Graham Number ratio of Tower Semiconductor was 1.50. The lowest was 0.79. And the median was 1.27.
TSEM's Price-to-Graham-Number is ranked better than 80.41% of 633
companies
in the Semiconductors industry
Industry Median: 1.95
vs TSEM: 1.03
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
Tower Semiconductor Graham Number Historical Data
The historical data trend for Tower Semiconductor's Graham Number can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Tower Semiconductor's Graham Number
For the Semiconductors subindustry, Tower Semiconductor's Price-to-Graham-Number, along with its competitors' market caps and Price-to-Graham-Number data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Tower Semiconductor's Price-to-Graham-Number Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, Tower Semiconductor's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Tower Semiconductor's Price-to-Graham-Number falls into.
Tower Semiconductor Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
Tower Semiconductor's Graham Number for the fiscal year that ended in Dec. 2023 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Tower Semiconductor (NAS:TSEM) Graham Number Explanation
Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:
Current price should not be more than 15 times average earnings of the past three years.
Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)
Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.
In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.
Tower Semiconductor's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Dec. 2023 )
=
32.36
/
30.87
=
1.05
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Be Aware
Please keep these in mind:
1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.
Tower Semiconductor Graham Number Related Terms
Thank you for viewing the detailed overview of Tower Semiconductor's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
Tower Semiconductor (Tower Semiconductor) Business Description
Tower Semiconductor Ltd is a pure-play specialty foundry that manufactures semiconductors. As a pure-play foundry, it focuses on producing integrated circuits (ICs), based on the design specifications of customers. The company's line of integrated circuits is incorporated into a variety of products and markets, including consumer electronics, personal computers, communications, automotive, and industrial and medical device products. Tower produces ICs alongside wholly-owned subsidiaries through fabrication facilities located in Japan. As a complement to its technology offerings, Tower offers services that enable a quick and accurate design cycle. To further assist customers with design and technical support, an integrated team helps clients through the manufacturing cycle.
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