Benjamin Graham — Warren Buffett's teacher at Columbia and the father of value investing — published his growth-stock valuation formula in the 1962 edition of Security Analysis, and revised it in 1974:
IV = EPS x (8.5 + 2g) x 4.4 / Y
What each piece meant, in Graham's world. 8.5 was his estimate of the fair P/E for a company with zero growth. 2g added roughly two points of P/E for every point of expected annual growth. 4.4 was the average yield on AAA corporate bonds in the early 1960s — Graham's era. Y is today's AAA yield, and dividing by it adjusts the whole formula for how bond yields have moved since then.
Why it still gets used today. It's simple, transparent, and deliberately unglamorous — there's no room to sneak in optimism through a hidden assumption. Graham himself warned it was a rough approximation, not a precise valuation tool, which is exactly why Intrinsic treats it as one of three inputs to a blended view, not the final answer on its own.
A known quirk. The formula is sensitive to the growth rate input in a way that can produce very large numbers for high-growth companies — which is why Intrinsic caps the growth rate used in this formula at 15%, regardless of what's typed in.