Berkshire Hathaway BRK-B
What does Berkshire Hathaway do?
Berkshire Hathaway is a diversified conglomerate based in the United States. Its core is the insurance business, which covers property and casualty, life and health insurance as well as reinsurance. In addition, there is a large freight railroad in North America, electricity and gas utilities, pipelines, and numerous industrial, consumer goods and trading companies, for example in specialty chemicals, tools, manufactured housing, confectionery and retail.
The group earns money in two ways: through the operating business of its subsidiaries and through investing funds, primarily from the insurance business (float), in equities, bonds and equity stakes. The subsidiaries are run largely on a decentralized basis, while capital is allocated centrally. Competitively, Berkshire is distinguished by very high capital resources, long-term investment horizons and the ability to carry out even large acquisitions without external financing. The breadth of the portfolio reduces dependence on individual industries.
Score profile
Rank vs. Insurance - Diversified (9 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Berkshire Hathaway ranks in the middle in the group Insurance - Diversified (5.8/10). On growth, the company ranks below average in the group Insurance - Diversified (2.8/10). On valuation (higher = cheaper), the stock ranks in the bottom fifth in the group Insurance - Diversified (0.6/10). On financial strength, Berkshire Hathaway ranks in the middle in the group Insurance - Diversified (5.0/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 26.0x | 11.0x | better than 6 % |
| Trailing P/E | 16.3x | 12.5x | better than 6 % |
| PEG ratio | 10.1x | 1.2x | better than 6 % |
| EV/EBITDA | -2.0x | 5.4x | better than 0 % |
| Price/sales | 3.1x | 1.5x | better than 6 % |
| Revenue growth | 11.2% | 11.2% | better than 50 % |
| Earnings growth | -27.6% | 16.1% | better than 6 % |
| Gross margin | 26.6% | 26.6% | better than 50 % |
| Operating margin | 26.1% | 13.7% | better than 83 % |
| Net margin | 19.5% | 11.8% | better than 83 % |
| Return on equity | 10.6% | 18.7% | better than 17 % |
| Debt/equity | 17.1% | 33.2% | better than 94 % |
| Current ratio | 2.6x | 1.8x | better than 69 % |
| Free cash flow yield | 4.2% | 5.3% | better than 39 % |
| Dividend yield | 0.0% | 2.8% | – |
| Payout ratio | 0.0% | 35.7% | – |
| Beta | 0.57 | 0.47 | – |
Valuation: what is Berkshire Hathaway worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Berkshire Hathaway a model range of 247.80 USD to 247.80 USD per share.
3 analysts, average rating “Buy”, average price target 555.67 USD (−4.8%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The profitability of the insurance business depends on claims experience, pricing discipline and the quality of risk selection.
- Income from equity stakes, the equity portfolio and cash investments influences earnings, particularly with interest rate changes and stock market fluctuations.
- Demand for transport, energy and industrial products determines results in the railroad, utility and industrial divisions.
Risks
- Large catastrophe losses or unexpectedly high claims reserves could significantly weigh on insurance results.
- Book value and earnings fluctuate with the market values of the extensive equity portfolio, which is concentrated in a few positions.
- Regulation and wildfire liability at utilities, as well as the economic sensitivity of the industrial and railroad divisions, could weigh on earnings and investment.
What to look for with Berkshire Hathaway
Book value per share together with the insurers' combined ratio shows how net asset value and underwriting quality support the value of the group.