Three S&P 500 companies pass Graham's defensive test
Under Benjamin Graham's original 1973 criteria, 3 of 503 companies qualify. All three are financials. Sixty percent of the index fails both halves of his balance-sheet test.
Benjamin Graham published a checklist for the defensive investor in The Intelligent Investor — criteria a company had to meet before someone unwilling to spend their life analysing businesses should own it. Adequate size. A strong balance sheet. A decade of uninterrupted profits. Growth. And strict ceilings on what you pay.
I run that checklist against every company in the S&P 500, nightly, from data filed with the SEC.
As of 18 August 2026, three companies pass.
| Ticker | Company | Sector |
|---|---|---|
| ACGL | Arch Capital Group | Financials |
| EG | Everest Group | Financials |
| FISV | Fiserv | Financials |
Two reinsurers and a payments processor. Graham excluded banks and insurers from his working-capital tests, so the bar for financials is five of six testable criteria rather than six of six — but the pass count still has to clear a fixed threshold. It does not shrink when filed data is missing.
Why so few pass
Graham's defensive standard is deliberately harsh. Under classic 1973 rules, the twenty-year dividend record cannot be tested on the filing history we store, so every company is scored on six fixed slots — not a smaller denominator when balance-sheet or earnings fields are absent from our extract.
That matters. Several names that previously appeared to pass were clearing a lower bar because missing inputs silently dropped whole criteria from both the numerator and the denominator. Homebuilders that looked defensive on five of five evaluable criteria were not failing Graham's balance-sheet test; the test was never run. Once the denominator is held constant, they no longer qualify.
The honest reading is not that the index got worse overnight. The scoring now matches the rule the site already described in its methodology: six of seven criteria testable under classic rules, with a fixed pass threshold.
What actually fails
Here is how often each criterion rejects a company, across the 450 with enough filing history to score:
| Criterion | Companies failing | Rate |
|---|---|---|
| 1. Adequate size | 1 | 0.2% |
| 2. Strong financial condition | 325 | 72.2% |
| 3. Positive earnings every year for a decade | 136 | 30.2% |
| 4. Uninterrupted dividends for 20 years | not evaluated | — |
| 5. Earnings growth of at least a third | 120 | 26.7% |
| 6. P/E no higher than 15 | 386 | 85.8% |
| 7. P/E × P/B no higher than 22.5 | 374 | 83.1% |
The price ceilings reject the most, which is unsurprising in an expensive market. But criterion 2 is where the interesting result is.
Graham's second criterion has two parts: a current ratio of at least two, and long-term debt not exceeding net working capital. Taken separately, 282 companies fail the current ratio test and 315 fail the debt test.
The overlap is almost total:
| Pattern | Companies |
|---|---|
| Fail the current ratio test only | 10 |
| Fail the debt test only | 43 |
| Fail both | 272 |
Two hundred and seventy-two companies — 60% of everything scoreable — fail both halves of Graham's balance-sheet test. Only ten fail one without the other.
That isn't two problems. It's one. Companies that run thin on working capital are the same companies carrying debt beyond what Graham thought prudent, and they are the substantial majority of the largest businesses in the United States.
That's not a scandal. Working capital management has changed enormously — just-in-time inventory, revolving credit and commercial paper mean a modern company can operate safely on a balance sheet that would have alarmed Graham. But it does mean the failures aren't a story about valuation alone, and a cheaper market wouldn't fix them.
Almost nobody fails on one thing
| Criteria failed | Companies |
|---|---|
| 0 | 7 |
| 1 | 23 |
| 2 | 100 |
| 3 | 192 |
| 4 | 97 |
| 5 | 31 |
Twenty-three companies are within a single criterion of passing. Four hundred and twenty fail on two or more, and the most common outcome by some distance is failing three.
This is the part that surprised me most. I expected a large group of good businesses failing narrowly on price — companies that would qualify after a correction. That group is 23 names.
Which has an uncomfortable implication for anyone waiting for a drop, including me: it's the premise this whole site is built on. A 20% fall in prices would fix criteria 6 and 7. It would do nothing whatsoever about the 325 companies failing Graham's balance-sheet test, the 136 without a decade of unbroken profits, or the 120 without his growth.
Cheaper prices produce more Graham candidates. They don't produce nearly as many as a loose denominator once implied.
Where everything lands
| Classification | Count |
|---|---|
| Defensive | 3 |
| Enterprising | 81 |
| Net-net | 0 |
| Speculative | 366 |
| Insufficient data | 53 |
Graham used "speculative" as a technical term, not an insult — it means the price being asked isn't supported by the criteria he set out. Three hundred and sixty-six companies, roughly three quarters of the scoreable index, sit there today.
Zero net-nets, across all 503. The strategy that made Graham's name — buying a company for less than its liquidation value — has no candidates whatsoever among the largest 500 American companies.
What this analysis cannot do
The twenty-year dividend criterion is not evaluated. Graham required an uninterrupted dividend record going back two decades. The filing data available covers at most ten years, so this criterion is marked "not evaluated" for every company rather than silently passed. Every stock page shows how many years are actually on file. Seven of Graham's criteria exist; six are currently testable under classic rules, with a constant denominator that does not shrink when other fields are missing.
These are Graham's 1973 thresholds, not adapted ones. Some are arguably obsolete. The dividend requirement would disqualify a company for a single cut during 2008 or 2020, punishing a decision many would now call prudent. A modernised ruleset is available on the site as a labelled alternative, and it produces a different answer.
None of this predicts anything. Companies failing this test have been excellent investments for years and may continue to be. Companies passing it can still lose money. The checklist screens for cheapness and financial strength; it has nothing to say about whether a business will still be good in a decade.
Method
Fundamentals come from company filings with the SEC via EDGAR. Prices update daily from a market data provider. The checklist runs nightly against all 503 index constituents, and every company's individual result — including which criteria it passes, fails, or cannot be evaluated on — is published at grahamwise.com. It's free, there's no signup, and there's nothing to buy.
Fifty-three companies are unscored and excluded from the percentages above: ten with genuinely short filing history on file, and 43 where our pipeline cannot yet extract enough EPS and revenue from SEC filings that do exist. See the next section.
The count changes nightly as prices move.
What "insufficient data" hides
Most of the 53 unscored companies are not missing SEC history. Forty-three have five or more fiscal years on file, but our data pipeline cannot yet read EPS and/or revenue from their filings. The filings exist; the gap is ours.
Examples: Berkshire Hathaway (BRK-B) and Visa (V) — we store revenue but not EPS from their XBRL tags. Goldman Sachs (GS), Morgan Stanley (MS), and Wells Fargo (WFC) — the opposite pattern, common among banks where revenue tags differ from industrial filers. Each of those stock pages says plainly that the gap is in our parser, not in the company's filing history.
BlackRock (BLK) is also unscored, but for a different reason: only four fiscal years on file, not an extraction failure.
This is a known bug. A fix is planned. Until then, those names sit outside the failure tables above — not because Graham would have passed them, but because we cannot run the checklist honestly on the data we have.
Data as of 18 August 2026. Educational analysis, not investment advice.