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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.
The historical rank and industry rank for Magic Software Enterprises's Graham Number or its related term are showing as below:
FRA:MGK'
s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.13 Med: 2.35 Max: 4.12
Current: 3.96
During the past 13 years, the highest Price to Graham Number ratio of Magic Software Enterprises was 4.12. The lowest was 1.13. And the median was 2.35.
FRA:MGK's Price-to-Graham-Number is not ranked
in the Software industry.
Industry Median: 1.88
vs FRA:MGK: 3.96
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
Magic Software Enterprises (FRA:MGK) 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.
Magic Software Enterprises's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Sep. 2025 )
=
16.10
/
4.07
=
3.95
* 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.
Magic Software Enterprises Graham Number Related Terms
Magic Software Enterprises Graham Number Historical Data
* 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.
FRA:MGK vs IBM, ACN, FISV: Graham Number Comparison
For the Information Technology Services subindustry, Magic Software Enterprises'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.
Magic Software Enterprises Price-to-Graham-Number vs Software Industry
For the Software industry and Technology sector, Magic Software Enterprises's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Magic Software Enterprises's Price-to-Graham-Number falls into.
* 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.
Magic Software Enterprises (FRA:MGK) has a Graham Number of €4.07 as of Sep. 2025. The Graham Number values a company based on its per-share earnings and book value. View historical data on Magic Software Enterprises and its competitors.
Is Magic Software Enterprises' Graham Number too high?
Magic Software Enterprises' current Graham Number is €4.07. Overall, Magic Software Enterprises has a GF Score™ of 90/100, reflecting its overall financial health beyond just this single metric.
How does Magic Software Enterprises' Graham Number compare to IBM and ACN?
Magic Software Enterprises' Graham Number of €4.07 can be compared against companies in the Software industry. The industry median Graham Number is 1.88. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Graham Number for a Software company?
The median Graham Number among Software companies is 1.88, based on 1,468 companies in the industry. Companies in the top quartile (top 25%) have a Graham Number significantly above this median, while those in the bottom quartile fall well below. However, Graham Number should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Graham Number mean?
A high Graham Number can signal that a stock is expensive relative to its fundamentals. The Graham Number values a company based on its per-share earnings and book value. View historical data on Magic Software Enterprises and its competitors. For the Software industry, the median Graham Number is 1.88 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Magic Software Enterprises's current Graham Number is €4.07. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Magic Software Enterprises stock overvalued right now?
Magic Software Enterprises (FRA:MGK) has a current Graham Number of €4.07. The stock's GF Value™ is €12.26, compared to a current price of €16.10 — trading 31.3% above its estimated fair value. The current Graham Number is €4.07. Magic Software Enterprises' overall GF Score™ is 90/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Graham Number calculated?
Graham Number is calculated from a company's financial statements. For Magic Software Enterprises (FRA:MGK), the current Graham Number is €4.07 as of Sep. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Magic Software Enterprises (FRA:MGK) Overvalued in 2026?
Based on GuruFocus' analysis, Magic Software Enterprises stock appears to be overvalued.
The current stock price of €16.10 is trading 31.3% above its estimated GF Value™ of €12.26.
Key valuation signals for FRA:MGK:
Graham Number: €4.07
GF Value™: €12.26 vs. price of €16.10 (31.3% above fair value)
No single metric tells the full story. See the FRA:MGK stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Magic Software Enterprises Ltd is a software development company. The company's operating segment includes Software Services and IT Professional Services. The company generates maximum revenue from the IT Professional Services segment. IT Professional Services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, as well as supplemental outsourcing services. Geographically, it derives a majority of revenue from the United States and also has a presence in Israel, Europe, Japan, and Other countries.
90GF Score
Get the complete analysis for FRA:MGK
Graham Number is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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