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 (2024-06-23), the stock price of ReadSoft AB is kr55.50. ReadSoft AB's graham number for the quarter that ended in Jun. 2014 was kr2.21. Therefore, ReadSoft AB's Price to Graham Number ratio for today is 25.12.
The historical rank and industry rank for ReadSoft AB's Graham Number or its related term are showing as below:
During the past 13 years, the highest Price to Graham Number ratio of ReadSoft AB was 14.06. The lowest was 0.00. And the median was 2.62.
LTS:0GQO's Price-to-Graham-Number is not ranked *
in the Software industry.
Industry Median: 2.11 * Ranked among companies with meaningful Price-to-Graham-Number only.
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
ReadSoft AB Graham Number Historical Data
The historical data trend for ReadSoft AB'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 ReadSoft AB's Graham Number
For the Software - Application subindustry, ReadSoft AB'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.
ReadSoft AB's Price-to-Graham-Number Distribution in the Software Industry
For the Software industry and Technology sector, ReadSoft AB's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where ReadSoft AB's Price-to-Graham-Number falls into.
ReadSoft AB Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
ReadSoft AB's Graham Number for the fiscal year that ended in Dec. 2013 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.
ReadSoft AB (LTS:0GQO) 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.
ReadSoft AB's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Jun. 2014 )
=
55.50
/
2.21
=
25.12
* 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.
ReadSoft AB Graham Number Related Terms
Thank you for viewing the detailed overview of ReadSoft AB's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
ReadSoft AB is a Sweden-based company that creates and markets software and services for document automation, processes such as data entry, information verification, document workflows, and e-voicing. The company operates in over 16 countries worldwide, with partnerships in an additional 70. The company offers solutions primarily for industries such as banking, manufacturing, service bureaus, market research, insurance, government, and medical. Major customers include IKEA, Audi, Porsche, Yves Rocher, Swedish Tax, DaimlerChrysler, HSBS Bank, Avon, Bosch, London Underground, New York Transit, Toyota, Volvo, Monoprix, Ericsson, and ING. The company is headquartered in Helsingborg, Sweden. The company offers ReadSoft DOCUMENTS, a complete software platform for document automation. The product incorporates five Automation Areas: Capture, capturing the information in any format and making it ready for electronic processing; Understand, enabling the computer to read, sort, interpret, extract, and index documents electronically; Manage, providing customers with control of electronic documents, including the verification and quality control with archiving and monitoring capabilities; Integrate, integration with the business software; and Interchange, Electronic Data Interchange. Capabilities within each Automation Area are customized to the needs of the customer, and solutions can be expanded to include any required extra capabilities. Also, this software can be integrated with systems such as SAP and Oracle E-Business Suite, Intentia, and IFS. ReadSoft business solutions for specific areas include: ReadSoft Documents for Mailrooms, Documents for EDI, Documents for Invoices, and Documents for Forms. Additionally, the company offers Professional Services such as project management and customization, Solution Optimization, Training, and Technical Support.
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