Market Cap : 639.83 M | Enterprise Value : 1.73 B | P/E (TTM) : | P/B : 0.24 |
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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.
As of today (2021-01-20), the stock price of Centennial Resource Development is $2.283500. Centennial Resource Development's graham number for the quarter that ended in Sep. 2020 was $N/A. Therefore, Centennial Resource Development's Price to Graham Number ratio for today is N/A.
During the past 6 years, the highest Price to Graham Number ratio of Centennial Resource Development was 3.34. The lowest was 0.00. And the median was 1.29.
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Centennial Resource Development's Graham Number falls into.
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
Centennial Resource Development's Graham Number for the fiscal year that ended in Dec. 2019 is calculated as
Graham Number | |||||
= | sqrt of (22.5 | * | Tangible Book per Share | * | EPS without NRI) |
= | sqrt of (22.5 | * | 11.769 | * | 0.06) |
= | 3.99 |
Centennial Resource Development's Graham Number for the quarter that ended in Sep. 2020 is calculated as
Graham Number | |||||
= | sqrt of (22.5 | * | Tangible Book per Share | * | EPS without NRI (TTM)) |
= | sqrt of (22.5 | * | 9.657 | * | -2.13) |
= | N/A |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
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.
Centennial Resource Development's Price to Graham number Ratio for today is calculated as
Price to Graham number | = | Share Price (Today) | / | Graham number (Q: Sep. 2020 ) |
= | 2.283500 | / | N/A | |
= | N/A |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
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.
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