QuantaSing Group Ltd (QSG) Benjamin Graham's Number

QuantaSing Group Ltd

QSG (NASDAQ)

(%)

Valuation
QuantaSing Group Ltd Benjamin Graham's Number

"""
    Model: Benjamin Graham's Number

# Render model description
model.render_description(r"""
## Benjamin Graham's Number

Graham number is a method developed for defensive investors as described in CHAPTER 14 in The Intelligent Investor. 
It evaluates a stock’s intrinsic value by calculating the square root of **22.5** times the multiplied value of the company’s **EPS** and **BVPS**.

**This fundamental value formula does not apply to asset-light companies with high growth rates and companies with negative earnings.**

Read more: [Using The Graham Number Correctly](https://www.grahamvalue.com/article/using-graham-number-correctly)
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "earnings_per_share": data.get("income:eps"),
        "book_value_per_share": data.get("balance:totalStockholdersEquity / income:weightedAverageShsOut"),
        "graham_multiplier": 22.5,
        "historical_years": 10
    }
})

# Calculate Graham's Number
graham_squared = assumptions.get("graham_multiplier") * assumptions.get("book_value_per_share") * assumptions.get("earnings_per_share")
if graham_squared < 0:
    raise ValueError("Graham's number squared must be positive. A negative or zero value is not meaningful in this context.")
stock_value = graham_squared ** 0.5  # Square root

model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Compute historical values and ratios
data.compute({
    "#bookValue": "balance:totalStockholdersEquity / income:weightedAverageShsOut",
    "#var": f"#bookValue * income:eps * {assumptions.get('graham_multiplier')}",
    "#grahamNumber": "function:sqrt:#var",
    "%revenueGrowthRate": "function:growth:income:revenue",
})

# Calculate average revenue growth rate
average_revenue_growth_rate = data.average(f"%revenueGrowthRate:{-assumptions.get('historical_years')}->0")
if average_revenue_growth_rate > 10:
    model.warn(f"Average Revenue Growth Rate {average_revenue_growth_rate}% is higher than 10%.")

average_revenue = data.average(f"income:revenue:{-assumptions.get('historical_years')}->0")
if average_revenue < 100_000_000:
    model.warn(f"Average Revenue {average_revenue} Million is lower than 100 Million.")

minimum_eps = data.min(f"income:eps:{-assumptions.get('historical_years')}->0")
if minimum_eps < 0:
    model.warn(f"EPS is negative! Applying this valuation can be misleading.")

dividend_count = data.count("dividend:adjDividend:*", properties={"except_values": [None, 0]})
if dividend_count < 20:
    model.warn(f"Company does not have 20 years of consistent dividend payments.")

# Current and working capital details
current_assets = data.get("balance:totalCurrentAssets")
current_liabilities = data.get("balance:totalCurrentLiabilities")

if current_assets < 2 * current_liabilities:
    model.warn("Current assets should be at least twice current liabilities.")

working_capital = current_assets - current_liabilities
long_term_debt = data.get("balance:longTermDebt")

if long_term_debt > working_capital:
    model.warn(f"Long Term Debt exceeds the working capital.")

# Render results for Graham's Number and other metrics
model.render_results([
    [stock_value, "Benjamin Graham's Number", "$"],
    [assumptions.get("earnings_per_share"), "Earnings Per Share (EPS)", "$"],
    [assumptions.get("book_value_per_share"), "Book Value Per Share", "$"],
    [average_revenue_growth_rate, 'Average Revenue Growth Rate', "%"],
    [average_revenue, 'Average Revenue', "$"],
    [minimum_eps, 'Lowest EPS', "$"],
    [current_assets, "Current Assets", "$"],
    [current_liabilities, "Current Liabilities", "$"],
    [working_capital, "Working Capital", "$"],
    [long_term_debt, "Long Term Debt", "$"],
])

# Render historical values chart
model.render_chart({
    "data": {
        "income:eps": "Earnings per Share",
        "#bookValue": "Book Value",
        "#grahamNumber": "Graham's Number",
        "dividend:adjDividend": "Dividend"
    },
    "start": -assumptions.get('historical_years'),
    "properties": {
        "title": "Historical numbers",
    }
})

# Render historical data table
model.render_table({
    "data": {
        "income:eps": "Earnings Per Share (EPS)",
        "#bookValue": "Book Value Per Share",
        "#grahamNumber": "Graham's Number",
        "quote:close": "Reference Market Price"
    },
    "start": -assumptions.get('historical_years'),
    "end": 0,
    "properties": {
        "title": "Historical data",
        "display_averages": True,
        "order": "descending",
    },
})

# Set descriptions for assumptions
assumptions.set_description({
    "earnings_per_share": r"""
        ## Earnings Per Share
        
        Earnings per share (EPS) is a company's net income subtracted by preferred dividends and then divided by the number of common shares it has outstanding.
    """,
    "book_value_per_share": r"""
        ## Book Value Per Share

A company's book value is the total shareholders' equity from the balance sheet. We use the book value per share.
        
        `Book Value Per Share` = `Total Equity` / `Shares Outstanding`
    """,
    "graham_multiplier": r"""
        ## Graham Multiplier

According to Benjamin Graham, the 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, the product of the multiplier times the ratio of price to book value should not exceed 22.5
        
        `Graham's Number` = `square_root`(15 * 1.5 * `EPS` * `Book Value`) = `square_root`(`Graham Multiplier` * `EPS` * `Book Value`)
    """,
    "historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,
})

print(f"End of model.")

Warnings

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Benjamin Graham's Number

Graham number is a method developed for defensive investors as described in CHAPTER 14 in The Intelligent Investor. It evaluates a stock’s intrinsic value by calculating the square root of 22.5 times the multiplied value of the company’s EPS and BVPS.

This fundamental value formula does not apply to asset-light companies with high growth rates and companies with negative earnings.

Interactive Assumptions

Earnings Per Share Earnings Per Share Earnings Per Share Earnings per share (EPS) is a company's net income subtracted by preferred dividends and then divided by the number of common shares it has outstanding.	#
Book Value Per Share Book Value Per Share Book Value Per Share A company's book value is the total shareholders' equity from the balance sheet. We use the book value per share. `Book Value Per Share` = `Total Equity` / `Shares Outstanding`	#
Graham Multiplier Graham Multiplier Graham Multiplier According to Benjamin Graham, the 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, the product of the multiplier times the ratio of price to book value should not exceed 22.5 `Graham's Number` = `square_root`(15 * 1.5 * `EPS` * `Book Value`) = `square_root`(`Graham Multiplier` * `EPS` * `Book Value`)	#
Historical Years Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#

Results
Benjamin Graham's Number	6.98 USD
Earnings Per Share (EPS)	1.2 USD
Book Value Per Share	1.8 USD
Average Revenue Growth Rate	16.44%
Average Revenue	419.9 Mil. USD
Lowest EPS	-1.49 USD
Current Assets	189.3 Mil. USD
Current Liabilities	110 Mil. USD
Working Capital	79.31 Mil. USD
Long Term Debt	430.2 Thou. USD

Historical numbers

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical numbers", "timeseries": "annual", "series": [{"label": "Earnings per Share", "mappingKey": "income:eps", "data": [{"l": "2021", "x": "2021-06-30", "y": -1.49}, {"l": "2022", "x": "2022-06-30", "y": -0.703}, {"l": "2023", "x": "2023-06-30", "y": -0.521}, {"l": "2024", "x": "2024-06-30", "y": 0.966}], "dataType": "#", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Book Value", "mappingKey": "#bookValue", "data": [{"l": "2021", "x": "2021-06-30", "y": -0.786}, {"l": "2022", "x": "2022-06-30", "y": -2.14}, {"l": "2023", "x": "2023-06-30", "y": 0.89}, {"l": "2024", "x": "2024-06-30", "y": 1.29}], "dataType": "#", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Graham's Number", "mappingKey": "#grahamNumber", "data": [{"l": "2021", "x": "2021-06-30", "y": 5.13}, {"l": "2022", "x": "2022-06-30", "y": 5.82}, {"l": "2024", "x": "2024-06-30", "y": 5.3}], "dataType": "#", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Dividend", "mappingKey": "dividend:adjDividend", "data": [{"l": "2024", "x": "2024-06-30", "y": 0.201}], "dataType": "#", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {}, "properties": {"display_table": false}, "width": "full"}

Historical data

Monetary values in USD amounts except #	Average	LTM Mar 11	2024 Jun 30	2023 Jun 30	2022 Jun 30	2021 Jun 30
Earnings Per Share (EPS)	-0.11	1.2	0.966	-0.521	-0.703	-1.49
Book Value Per Share	0.211	1.8	1.29	0.89	-2.14	-0.786
Graham's Number	5.81	6.98	5.3		5.82	5.13
Reference Market Price	5.02	4.96	1.65	8.44

Estimated Value

USD

Market Price USD

Benjamin Graham's Number

Interactive Assumptions

Earnings Per Share

Book Value Per Share

Graham Multiplier

Graham Multiplier

Historical Years

Historical Years

Results

Historical numbers

Historical data

Discounted Cash Flow to Firm - Perpetual Growth

Earnings Power Value

Simple Dividend Discount Model

Simple Excess Return Model

Two-Stage Dividend Discount Model

Two-Stage Excess Return Model

Discounted Cash Flow to Firm - Exit Multiple

Discounted Future Market Cap

Peter Lynch Fair Value

Altman Z-Score

Beneish M-Score

Capital Asset Pricing Model (CAPM)

Margin Analysis

Piotroski F-Score

Return on Invested Capital (ROIC)

Shiller PE (CAPE) Ratio

Weighted Average Cost of Capital (WACC)

Market is Open

After-Hours Quote

Market is Open

After-Hours Quote

QuantaSing Group Ltd Benjamin Graham's Number

Estimated Value

USD

Market Price USD

Benjamin Graham's Number

Interactive Assumptions

Earnings Per Share

Earnings Per Share

Book Value Per Share

Book Value Per Share

Graham Multiplier

Graham Multiplier

Historical Years

Historical Years

Results

Historical numbers

Historical data

Discounted Cash Flow to Firm - Perpetual Growth

Earnings Power Value

Simple Dividend Discount Model

Simple Excess Return Model

Two-Stage Dividend Discount Model

Two-Stage Excess Return Model

Discounted Cash Flow to Firm - Exit Multiple

Discounted Future Market Cap

Peter Lynch Fair Value

Altman Z-Score

Beneish M-Score

Capital Asset Pricing Model (CAPM)

Margin Analysis

Piotroski F-Score

Return on Invested Capital (ROIC)

Shiller PE (CAPE) Ratio

Weighted Average Cost of Capital (WACC)