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Time to Buy Berkshire Hathaway Stock with Earnings Approaching?
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Finance and insurance conglomerate Berkshire Hathaway (BRK.B - Free Report) ) will round out this week’s earnings lineup in a shortened week of trading.
Still, there is much anticipation for the renowned holding company’s fourth-quarter earnings report on Friday, February 24.
Sentiment
Trading at $303, BRK.B shares are only 16% from their 52-week highs but investors are anxious as there hasn’t been overwhelming momentum for the stock or other well-known financial conglomerates such as BlackRock (BLK - Free Report) ) and Goldman Sachs (GS - Free Report) ) to start the new year.
On that note, only Goldman Sachs’ year-to-date performance has topped the S&P 500 with Berkshire and BlackRock trailing the broader market. However, Berkshire’s stock does carry a “B” Style Scores grade for Momentum going into its Q4 report and strong results could be a significant catalyst for the stock.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
Berkshire’s Q4 earnings are projected at $3.31 per share, which would be up 1% year over year. The Zacks Surprise Prediction indicates Berkshire should reach quarterly expectations on its bottom line with the Most Accurate Estimate also having Q4 EPS at $3.31 a share. Sales for the quarter are expected to be $74.56 billion, up 4% from the prior year quarter.
Image Source: Zacks Investment Research
Rounding out Berkshire’s fiscal 2022 earnings are now forecasted to climb 22% to $14.85 a share compared to EPS of $12.12 in 2021. Earnings are expected to rise another 12% in FY23 to $16.62 a share.
Earnings estimate revisions have remained the same throughout the quarter. On the top line, sales are now forecasted to be up 8% for FY22 and rise another 2% in FY23 at $305.90 billion.
Image Source: Zacks Investment Research
Performance & Valuation
Despite its lackluster year-to-date performance, Berkshire stock has held up better than the broader market over the last year. Berkshire is only down -2% in the last 12 months to top the S&P 500’s -6%, and BlackRock’s -7% but trail Goldman Sachs +6%.
Even better, over the last decade, Berkshires +197% has topped Blackrock, Goldman Sachs, and the benchmark.
Image Source: Zacks Investment Research
At its current levels, BRK.B trades at 18.2X forward earnings which is above the industry average of 13.5X but Berkshire is an industry leader. Plus, Berkshire’s stock trades 40% below its decade-long high of 30.4X and at a 10% discount to the median of 20.3X.
Image Source: Zacks Investment Research
Bottom Line
Berkshire Hathaway’s (BRK.B - Free Report) stock currently lands a Zacks Rank #3 (Hold) going into its Q4 report. Holding on to shares of BRK.B at their current levels could be rewarding with the stock trading attractively relative to its past from a valuation standpoint.
With that being said, much of the upside potential in BRK.B stock largely depends on Berkshire illustrating its bottom line will remain robust in correlation with positive guidance.
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Time to Buy Berkshire Hathaway Stock with Earnings Approaching?
Finance and insurance conglomerate Berkshire Hathaway (BRK.B - Free Report) ) will round out this week’s earnings lineup in a shortened week of trading.
Still, there is much anticipation for the renowned holding company’s fourth-quarter earnings report on Friday, February 24.
Sentiment
Trading at $303, BRK.B shares are only 16% from their 52-week highs but investors are anxious as there hasn’t been overwhelming momentum for the stock or other well-known financial conglomerates such as BlackRock (BLK - Free Report) ) and Goldman Sachs (GS - Free Report) ) to start the new year.
On that note, only Goldman Sachs’ year-to-date performance has topped the S&P 500 with Berkshire and BlackRock trailing the broader market. However, Berkshire’s stock does carry a “B” Style Scores grade for Momentum going into its Q4 report and strong results could be a significant catalyst for the stock.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
Berkshire’s Q4 earnings are projected at $3.31 per share, which would be up 1% year over year. The Zacks Surprise Prediction indicates Berkshire should reach quarterly expectations on its bottom line with the Most Accurate Estimate also having Q4 EPS at $3.31 a share. Sales for the quarter are expected to be $74.56 billion, up 4% from the prior year quarter.
Image Source: Zacks Investment Research
Rounding out Berkshire’s fiscal 2022 earnings are now forecasted to climb 22% to $14.85 a share compared to EPS of $12.12 in 2021. Earnings are expected to rise another 12% in FY23 to $16.62 a share.
Earnings estimate revisions have remained the same throughout the quarter. On the top line, sales are now forecasted to be up 8% for FY22 and rise another 2% in FY23 at $305.90 billion.
Image Source: Zacks Investment Research
Performance & Valuation
Despite its lackluster year-to-date performance, Berkshire stock has held up better than the broader market over the last year. Berkshire is only down -2% in the last 12 months to top the S&P 500’s -6%, and BlackRock’s -7% but trail Goldman Sachs +6%.
Even better, over the last decade, Berkshires +197% has topped Blackrock, Goldman Sachs, and the benchmark.
Image Source: Zacks Investment Research
At its current levels, BRK.B trades at 18.2X forward earnings which is above the industry average of 13.5X but Berkshire is an industry leader. Plus, Berkshire’s stock trades 40% below its decade-long high of 30.4X and at a 10% discount to the median of 20.3X.
Image Source: Zacks Investment Research
Bottom Line
Berkshire Hathaway’s (BRK.B - Free Report) stock currently lands a Zacks Rank #3 (Hold) going into its Q4 report. Holding on to shares of BRK.B at their current levels could be rewarding with the stock trading attractively relative to its past from a valuation standpoint.
With that being said, much of the upside potential in BRK.B stock largely depends on Berkshire illustrating its bottom line will remain robust in correlation with positive guidance.