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Average Quote by Benjamin Graham

“Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.” quote by Benjamin Graham
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“Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.”

Benjamin Graham

About This Quote

Calculate the P/E ratio by dividing current price by the average earnings of the past three years.

In simple terms: P/E = price ÷ three‑year average earnings.

Key Takeaway

Use this metric to assess stock value.

Themes

finance valuation investment

Mood

practical cautious

Type

educational advice

When to use this quote

  • stock selection
  • portfolio building
  • financial planning
  • risk assessment

Key Concepts

fundamental analysis ratio analysis

Questions to Reflect On

  • How does this ratio compare to other valuation tools?
  • When might a low P/E be misleading?
A Different Perspective

P/E ignores future growth prospects and market conditions.

2.2 out of 5 (9 ratings)

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