It's Time For a Quick Look at Berkshire Hathaway (BRK.B)'s Fundamentals

Berkshire Hathaway (BRK.B) — Fairly Valued With a Low Growth Profile

Berkshire Hathaway returned losses of -6.0% last year, with its stock price reaching a high of $350.86 and a low of $259.85. Over the same period, the stock returned a similar cumulative performance to the S&P 500. As of April 2023, the company's 50-day average price was $308.09.

Berkshire Hathaway Inc., through its subsidiaries, engages in the insurance, freight rail transportation, and utility businesses worldwide. Based in Omaha, NE, the Large-Cap Financial Services company has 383,000 full time employees. Berkshire Hathaway has not offered a dividend during the last year.

Declining Revenues With a Flat Capital Expenditure Trend:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue $327,223,000 $286,256,000 $354,636,000 $234,190,000
Interest Income -$3,961,000 -$4,083,000 -$4,172,000 -$4,352,000
Net Margins 24.88% 14.85% 25.32% -9.74%
Net Income $81,417,000 $42,521,000 $89,795,000 -$22,819,000
Depreciation & Amort. -$10,064,000 -$10,596,000 -$10,718,000 -$10,899,000
Earnings Per Share $33.22 $17.78 $39.64 -$10.49
Diluted Shares 2,450,918 2,391,702 2,265,269 1,298,190
Free Cash Flow $22,708,000 $26,761,000 $26,145,000 $21,760,000
Capital Expenditures -$15,979,000 -$13,012,000 -$13,276,000 -$15,464,000
Long Term Debt $98,682,000 $113,547,000 $111,911,000 $120,315,000
LT Debt to Equity 0.23 0.26 0.22 0.25

Berkshire Hathaway does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $17.79, the company has a forward P/E ratio of 18.2. In comparison, the average P/E ratio for the Financial Services sector is 14.34. On the other hand, the market is undervaluing Berkshire Hathaway in terms of its equity because its P/B ratio is 0.0. In comparison, the sector average is 1.57. In conclusion, Berkshire Hathaway's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

Berkshire Hathaway Is the Subject of Mixed Market Indicators:

The lone analyst who follows Berkshire Hathaway has a rating of hold and a target price of $371.0, which is -17.0 away from its current price.

Berkshire Hathaway has a very low short interest because 0.6% of the company's shares are sold short. Institutions own 66.1% of the company's shares, and the insider ownership rate stands at 0.37%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 11% stake in the company is worth $44,765,748,888.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.