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.