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

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Berkshire Hathaway Inc. (BRK.B - Free Report) is expected to report third-quarter 2016 results on Nov 4, after the market closes. Last quarter, this company delivered a 1.63% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing this Past Quarter

Berkshire Hathaway’s strategic acquisitions should have a positive impact on the operational results.

The utilities and energy, manufacturing, service and retail, as well as finance and financial products segments are expected to continue delivering solid results. This in turn should drive improvement in the top line.

Better revenues from the railway business – Burlington Northern SantaFe Corp – alongside outperformance by the Manufacturing, Service and Retail segments will likely lead to overall top-line growth.

However, Berkshire Hathaway incurred high expenses due to rail road operations in the quarter. This is likely to weigh on margin expansion.

With respect to the surprise trend, Berkshire Hathaway beat expectations in two of the last four quarters, but with an average miss of 1.54%.

BERKSHIRE HTH-B Price and EPS Surprise

 

BERKSHIRE HTH-B Price and EPS Surprise | BERKSHIRE HTH-B Quote

The company’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the quarter’s results.

Earnings Whispers

Our proven model does not conclusively show that Berkshire Hathaway will beat the Zacks Consensus Estimate in the quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks 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 $1.88.

Zacks Rank: Berkshire Hathaway has a Zacks Rank #3, which increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.

The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
 
AerCap Holdings N.V. 
(AER - Free Report) , which is slated to report third-quarter earnings results on Nov 8, has an Earnings ESP of +2.82% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ares Management, L.P. (ARES - Free Report) has an Earnings ESP of +2.63% and a Zacks Rank #2. The company is slated to report third-quarter earnings results on Nov 7.

Banco Santander (Brasil) S.A. (BSBR - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 8.

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