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Berkshire Hathaway Inc is a giant holding company known for its diversified business portfolio. It comprises of sectors like insurance (including GEICO and General Re), utilities, freight rail transportation (Burlington Northern Santa Fe) and various manufacturing and retailing industries. Due to its massive size and the influence of its chairman, Berkshire Hathaway is closely watched by investors and its stock price is seen as a barometer of broader economic trends.
With a market cap of over $1 trillion, Berkshire Hathaway’s share price performance continues to be a point of interest for institutional and retail investors.
In this article we are going to discuss in detail Berkshire Hathaway’s current share price, historical trends and future outlook.
Berkshire Hathaway Class A shares (BRK-A) were trading at $697,640.00 as at writing. A slight drop of 0.04%. Though the share has faced the drop, it still offers great investment options for investors that are eyeing a long term thing. As of now, the market cap of the company is over $ 1.004 trillion, making it one of the most valuable firms in the world.
Berkshire's shares this year have also improved with regards to its price, gaining more than 25% year-to-date. The company's price-to-earnings ratio (P/E) sits at 14.82 indicating reasonable valuation levels compared with other companies in the same field.
Despite the absence of dividends, the stock continues to gain value based on capital appreciation and the strength of its subsidiaries.
Over the years, its share price has kept growing. This has reflected the company’s long-standing strategy of acquiring and managing a broad array of profitable businesses. Over the past five years, Berkshire Hathaway's stock has more than doubled, showing its ability in both its operational strength and the whole market's performance.
For example in 2023, Berkshire's stock increased by 22.7% outperforming the S&P 500.
This historical price trend highlights the company's resilience and its ability to generate profits even in uncertain market conditions. Berkshire's insurance business model, which allows it to invest its insurance float in equities rather than more conservative fixed-income securities, has been a great driver of its long-term success.
Price-to-Earnings (P/E): 14.82
Price-to-Sales: 2.50
Price-to-Book: 1.67
Return on Equity (ROE): 11.82%
Profit Margin: 18.33%
These numbers indicate Berkshire’s operational efficiency and profitability. The low P/E ratio suggests that the stock is reasonably priced, given its earnings power. The company's substantial profit margin underscores its ability to generate income from operations.
Berkshire Hathaway’s financial highlights for the trailing twelve months (TTM) include a net income of $67.86 billion on revenues of $370.11 billion.Berkshire Hathaway remains with a cash resort of $276.94 billion, that gives the company the capability to make acquisitions or buy back its stock if it so chooses to do.
In 2024, Berkshire has trimmed its equity portfolio, reducing its holdings in Bank of America by over $10.5 billion in recent months. This action follows a trend of net stock sales that began seven quarters ago, even as the overall market has seen a surge. Despite these sales, Berkshire has strategically increased its stake in SiriusXM to 32%, showing Buffett's continued confidence in specific sectors.
The research analysis conducted within Berkshire Hathaway indicates good financial performance in the last few quarters. EPS, the company's term for earnings per share, considers a vast number of portfolios in making the company profitable. Here’s a breakdown:
Q4 2023 EPS: Beat expectations by +407.42.
Q1 2024 EPS: Growth on significant levels with a beat of +971.59.
Q2 2024 EPS: Continued strong performance with +1,608.19.
Q3 2024 EPS (Estimate): Projected to be +7,542.69 with the earnings announcement expected on November 4.
The second part of the analysis; Revenue vs. Earnings, indicates that there has been an increase in both throughout:
Q3 2023 Revenue: $93.65 billion, with earnings of $30.35 billion.
Revenues have continuously outstripped earnings, and this ratio has continued throughout 2024 even with strong revenues and potentially high earnings.
These figures point out of the operational performance which is sustainable and generates earnings for every dollar of revenues. It highlights the company's ability to convert high revenues into bottom-line profits, maintaining its leadership position in the market.
Berkshire Hathaway has long been known for its conservative dividend policy, choosing instead to reinvest earnings into growth opportunities. The company does not pay a dividend, a decision guided by Warren Buffett’s belief that retained earnings are better used for acquiring businesses, rather than distributing them to shareholders.
However, despite the absence of dividends, the stock has continued to attract investors due to its capital appreciation potential. The company's significant investments, combined with its cash flow, provide plenty of opportunities to deliver value to shareholders through stock buybacks and investments in high-growth businesses.
Berkshire Hathaway Class A (BRK-A) stock outperformed the S & P 500 for most recent periods up to 17th October 2024. Here’s an analysis of the stock’s return over the following periods:
Year-to-Date Return (YTD) is 28.80% while S & P 500 returned +22.91%.
Since last year the stock has delivered 32.50% return, though this was lower than S & P 500 return of 34.04% within the time frame.
The three year return in this case is reported as 63.41%, which is higher than S & P 500’s overall TR which stood at 31.11%.
The stock has seen growth of 122.68% over the five year period and has done better than the S & P 500 index return of 96.09%.
This provides an insight into Berkshire Hathaway being able to sustain long term value creation. The company operates through a multitude of business sectors including insurance, utilities, production and retailing which allows them to achieve strong economic returns over average market returns especially when the investments are held for long horizons.
There is also an image which compares Berkshire Hathaway with other diverse insurance-based companies that offer excellent services such as AIG (American International Group), ACGL (Arch Capital Group Ltd.) and SLF (Sun Life Financial Inc).
Some prime determinants such as Market cap, type Of Industry have shareholders cross-check the performance of various rival companies in the same sector as Berkshire Hathaway. Here’s what the numbers say at the moment:
AIG: The market cap stands at 50.64 billion and YTD Growth is reported as +1.94 %.
ACGL: $40.51 billion has maintained a marginal YTD return growth of +0.24%.
SLF: $32.90 billion, YTD return of +0.15% showing some growth.
While those companies were having their market and financial resources, Berkshire Hathaway became a giant surpassing these companies with the market cap of $1.003 trillion, assuring its competitive edge in the insurance and diversified industries.
The comparison also highlights the stronger YTD return of Berkshire which was 28.80%, indicating the company’s ability to utilize its diverse business edges against its competitors.
Analyzing the long-term returns with emphasis on the 3-year and 5-year period of Berkshire incorporates the company’s capacity to outperform the general market. Berkshire’s three-year return of +63.41% greatly exceeded that of the S&P 500, which managed a return of +31.11%. Over a period of five years, Berkshire managed not only to gain a 122.68% return, but this also beat the S&P 500, which gained 96.09%.
This outperformance over time can be explained due to Warren Buffett’s investments strategy that focuses on in buying value stocks and holding them for a considerable period of time. While a lot of firms strictly focus on temporally trends, which is quite appealing, Berkshire’s strategy is the acquisition of competent and lucrative companies, belonging to various industries, especially insurance and reinsurance, paired with a great rate of growth.
That said, together with the history of sound cash holdings, these policies still position Berkshire Hathaway well for investors that are looking to build wealth over the long term.
On June 4th 2024, Berkshire Hathaway’s stock surged to a new high of $741,971. This was as a result of an irregularity at the stock exchange.This error was however corrected after the affected stocks were halted for sometime. The share price rose again to a height of $727,466 on 4th September but failed to trade above the level. It began a correction that saw it resisted at around 673,000 zone.
Since the low the stock has continued to go upwards as it seeks to overturn the $727,466 resistance point. We closely monitor this level for potential breakout opportunities, reflecting the stock's resilience and continued investor confidence.
Berkshire Hathaway is still a reliable investment for long-term capital gain oriented investors. Due to its good fundamentals, a good mix of profitable firms, and effective management, chances are that the share price of the company will continue going up in the next few years. Although concerns may be raised by investors over Warren Buffett’s eventual exit, the succession plan that includes Greg Abel and Ajit Jain suggests that the overall value creation strategy of Berkshire Hathaway will not change for a long time.
For shareholders the one year target estimation for Berkshire Hathaway is $745.000 which suggests a further potential increase from the present levels. As always, you can buy and hold the stock if you want to benefit from the power of one of the most trusted and respected firms across the globe
