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 (2024-05-05), the stock price of Precision Castparts is $234.95. Precision Castparts's graham number for the quarter that ended in Sep. 2015 was $31.65. Therefore, Precision Castparts's Price to Graham Number ratio for today is 7.42.
The historical rank and industry rank for Precision Castparts's Graham Number or its related term are showing as below:
PCP's Price-to-Graham-Number is not ranked *
in the Industrial Products industry.
Industry Median: 1.54 * 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.
Precision Castparts Graham Number Historical Data
The historical data trend for Precision Castparts'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 Precision Castparts's Graham Number
For the Metal Fabrication subindustry, Precision Castparts'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.
Precision Castparts's Price-to-Graham-Number Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, Precision Castparts's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Precision Castparts's Price-to-Graham-Number falls into.
Precision Castparts Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
Precision Castparts's Graham Number for the fiscal year that ended in Mar. 2015 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.
Precision Castparts (NYSE:PCP) 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.
Precision Castparts's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Sep. 2015 )
=
234.95
/
31.65
=
7.42
* 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.
Precision Castparts Graham Number Related Terms
Thank you for viewing the detailed overview of Precision Castparts's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
Precision Castparts (Precision Castparts) Business Description
Precision Castparts Corp was incorporated in the State of Oregon. The Company is a manufacturer of complex metal components and products provides high-quality investment castings, forgings and fasteners/fastener systems for critical aerospace and power applications. It also provides investment castings and forgings for general industrial, armament, medical and other applications; nickel alloys and mill forms, as well as cobalt alloys, for the aerospace, chemical processing, oil and gas, pollution control and other industries; seamless pipe for coal-fired, industrial gas turbine, and nuclear power plants, as well as oil and gas applications; fasteners for automotive and general industrial markets; specialty alloys for the investment casting industry; refiner plates, screen cylinders and other products for the pulp and paper industry; metal-injection-molded and ThixoFormedparts for automotive and other markets; grinder pumps and affiliated components for low pressure sewer systems; critical auxiliary equipment and gas monitoring systems for the power generation industry; and metalworking tools for the fastener market and other applications. It manufactures complex metal components and products in three main business segments: Investment Cast Products, Forged Products and Fastener Products. The Company's Investment Cast Products segment manufactures investment castings for aircraft engines, IGT engines, airframes, medical prostheses, armament, unmanned aerial vehicles and other industrial applications. The segment also provides alloys to PCC's investment casting operations, as well as to other investment casting companies. It manufactures forged components for the aerospace and power generation markets. Forged Products' aerospace and IGT sales are mainly derived from the same large engine customers served by the Investment Cast Products segment, with additional aerospace sales to manufacturers of landing gear and airframes. Therefore, the dynamics of the aerospace and IGT markets, as described in the Investment Cast Products section above, are virtually the same for Forged Products. It manufactures forged components for the aerospace and power generation markets. Forged Products' aerospace and IGT sales are mainly derived from the same large engine customers served by the Investment Cast Products segment, with additional aerospace sales to manufacturers of landing gear and airframes. Therefore, the dynamics of the aerospace and IGT markets, as described in the Investment Cast Products section above, are virtually the same for Forged Products. The Company's main competitors are Ladish Co., a subsidiary of Allegheny Technologies, Inc., Fortech, S.A. and Thyssen AG for aerospace turbine products, Alcoa Inc. and Firth Rixson Limited for aerospace structural products, Vallourec & Mannesmann Tubes and Sumitomo Corporation for energy products and Allegheny Technologies, Inc., Carpenter Technology Corporation, Haynes International, Inc., an
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