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 (2024-05-06), the stock price of Pepco Holdings is $26.93. Pepco Holdings's graham number for the quarter that ended in Dec. 2015 was $18.53. Therefore, Pepco Holdings's Price to Graham Number ratio for today is 1.45.
The historical rank and industry rank for Pepco Holdings's Graham Number or its related term are showing as below:
POM's Price-to-Graham-Number is not ranked *
in the Utilities - Regulated industry.
Industry Median: 1.155 * 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.
Pepco Holdings Graham Number Historical Data
The historical data trend for Pepco Holdings'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 Pepco Holdings's Graham Number
For the Utilities - Regulated Electric subindustry, Pepco Holdings'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.
Pepco Holdings's Price-to-Graham-Number Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, Pepco Holdings's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Pepco Holdings's Price-to-Graham-Number falls into.
Pepco Holdings Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
Pepco Holdings's Graham Number for the fiscal year that ended in Dec. 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.
Pepco Holdings (NYSE:POM) 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.
Pepco Holdings's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Dec. 2015 )
=
26.93
/
18.53
=
1.45
* 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.
Pepco Holdings Graham Number Related Terms
Thank you for viewing the detailed overview of Pepco Holdings's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
Pepco Holdings (Pepco Holdings) Business Description
Pepco Holdings Inc was incorporated in Delaware in 2001, for the purpose of effecting the acquisition of Conectiv by Potomac Electric Power Company. Pepco Holdings, Inc. is a public utility holding Company that, through its operating subsidiaries, is engaged in two principal business operations: electricity and natural gas delivery, and competitive energy generation, marketing and supply. Pepco is engaged in the transmission and distribution of electricity in Washington, D.C. and portions of Prince George's and Montgomery Counties in suburban Maryland. Pepco was incorporated in Washington, D.C. in 1896 and became a domestic Virginia corporation in 1949. PHI, through its subsidiaries, is subject to regulation by various federal, regional, state, and local authorities with respect to the environmental effects of its operations, including air and water quality control, solid and hazardous waste disposal, and limitations on land use. Pepco Energy Services sells retail electricity and natural gas and provides integrated energy management services in the mid-Atlantic region, and its subsidiaries own and operate generation plants located in PJM. Pepco Energy Services also provides high voltage construction and maintenance services to utilities and other customers throughout the United States and low voltage electric and telecommunication construction and maintenance services in the Washington, D.C. area. PHI's business is to remain a regional diversified energy delivery utility and competitive energy services Company focused on value creation and operational excellence.
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