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Berkshire (BRK.B) to Report Q3 Earnings: What's in Store?

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Berkshire Hathaway Inc. (BRK.B - Free Report) beat on earnings in three of the last four reported quarters and missed in one, with the average beat being 6.8%. The Zacks Consensus Estimate for the third quarter of 2021 is pegged at $3.01 per share, indicating an increase of 30.8% from the year-ago quarter reported figure.

Let’s see how things have shaped up prior to the announcement of the third-quarter results.

Berkshire Hathaway’s net new business, increased participation on renewals, improved pricing and favorable foreign currency translation effects may have aided premium revenues.

Per Marsh, global commercial insurance prices in the third quarter of 2021 increased 15%. Property rates increased 9%, casualty pricing rose 6%, U.S. financial and professional lines pricing increased 32% while cyber insurance pricing rose 96%.

Continued insurance business growth is expected to have increased float.

The third quarter is likely to have witnessed catastrophe losses, stemming from Hurricane Ida. This is likely to have weighed on underwriting profit and resulted in deterioration of the combined ratio. Modeling firm AIR Worldwide estimates catastrophes around the world to cause around $106 billion in losses on an annual average basis that will hit the insurance and reinsurance market.

The railroad business is expected to have benefited from higher freight volumes and lower costs due to improved productivity.

Utilities and energy business is expected to have benefited from higher earnings from the natural gas pipelines, including the effects of a business acquisition, and from the real estate brokerage businesses.

Manufacturing, service and retailing businesses are expected to have benefited from higher customer demand in many businesses.

Strategic acquisitions are likely to have boosted the company’s performance.

Expenses are expected to have risen on higher insurance losses and loss adjustment expenses, health insurance benefits, insurance underwriting expenses, cost of sales and services, interest expense, freight rail transportation expenses, utilities and energy cost of sales and other expenses, other expenses as well as higher interest expense.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Berkshire Hathaway this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: Berkshire Hathaway has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $3.01. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. price-eps-surprise | Berkshire Hathaway Inc. Quote

Zacks Rank: Berkshire Hathaway currently carries a Zacks Rank of 2.

Stocks to Consider

Some stocks from the finance sector with the right combination of elements to come up with an earnings beat this time around are:

GoHealth (GOCO - Free Report) has an Earnings ESP of +22.22% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Equity Investment Life Holding (AEL - Free Report) has an Earnings ESP of +0.13% and a Zacks Rank of 3.

PagSeguro Digital (PAGS - Free Report) has an Earnings ESP of +31.41% and a Zacks Rank of 3.