Let me make this a little clearer. Ben Graham was Warren Buffett's mentor. He loved buying companies for less than their break up value. The "Graham Number" is based on his philosophies but also takes into consideration the earnings stream.
It is the square root of 22.5 X Tangible Book Value Per Share X EPS without non-recurring items.
Why 22.5?
Ben Graham looked for companies with a P/BV * PE of 22.5 or less.
So The square root of 22.5 X $1.10 X $0.14 is $1.86.
Its only a guide like many others.
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