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Berkshire Stock Falls 8% in 3 Months: Should You Buy the Dip?
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Key Takeaways
BRK.B stock has fallen 7.8% in 3 months, trailing its industry, sector, and the broader S&P 500 index.
Berkshire's insurance unit drives long-term growth, backed by solid underwriting and growing insurance float.
Muted analyst sentiment, premium valuation, and weak return metrics suggest a cautious near-term outlook.
Shares of Berkshire Hathaway Inc. (BRK.B - Free Report) have lost 7.8% in the past three months, underperforming the industry’s decline of 6.7%, the Finance sector’s increase of 4.8% and the Zacks S&P 500 composite’s increase of 9.1% in the said time frame.
BRK.B is now trending below its 50-day simple moving average (SMA), indicating the possibility of a downside ahead.
Berkshire Vs Industry, Sector, S&P 500
Image Source: Zacks Investment Research
Shares of Chubb Limited (CB - Free Report) and The Progressive Corporation (PGR - Free Report) have lost 4.9% and 4.7% in the past three months, respectively.
Chubb, a prominent global provider of property and casualty insurance and reinsurance, is strategically leveraging growth opportunities within the middle-market segment in both domestic and international arenas. The insurer is driving long-term expansion by strengthening its core package offerings and expanding its portfolio of specialty insurance products. In addition, Chubb continues to invest in key strategic initiatives that support its broader growth objectives and competitive positioning.
Progressive, one of the largest auto insurance groups in the United States, is well-equipped to maintain profitability, supported by its strong market position, broad product suite, and superior underwriting and operational execution. Progressive has refined its strategy to emphasize bundled auto products, limit exposure to high-risk properties, and enhance segmentation through the introduction of innovative, targeted insurance solutions.
BRK.B Shares Are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 1.59, higher than the industry average of 1.55.
Image Source: Zacks Investment Research
Berkshire is relatively cheap compared to Progressive and Chubb.
Average Target Price for BRK.B Suggests Upside
Based on short-term price targets offered by four analysts, the Zacks average price target is $537.75 per share. The average suggests a potential 10.6% upside from the last closing price.
Image Source: Zacks Investment Research
What’s Working in Favor of Berkshire Hathaway?
Berkshire Hathaway’s insurance operations form the core of its business model, accounting for roughly one-quarter of total revenues and serving as a key engine of long-term growth. With extensive market exposure, disciplined pricing and robust underwriting performance, the insurance segment is well-equipped to perform even under adverse market conditions.
Complementing its insurance strength, Berkshire’s diversified structure adds resilience to its overall operations. A major stabilizing force is Berkshire Hathaway Energy (BHE), the company’s energy subsidiary, which focuses heavily on renewable energy. As a regulated utility, BHE generates stable and predictable cash flows that are largely insulated from economic cycles. Its strong financial foundation and long-term commitment to clean energy make it a growing pillar of Berkshire’s future growth in a world rapidly shifting toward electrification and sustainability.
The Utilities and Energy segment is further supported by Burlington Northern Santa Fe (BNSF) though it faces challenges such as a less favorable business mix and declining fuel surcharge income. Still, rising demand for utility services is expected to bolster future performance in this segment.
Berkshire’s Manufacturing, Service, and Retail divisions also stand to gain from an improving economic climate, with heightened consumer activity fueling revenue expansion and margin growth.
Meanwhile, continued growth in the insurance segment has driven the expansion of Berkshire’s insurance float—the pool of premiums held before claims are paid—from approximately $114 billion at the end of 2017 to $173 billion as of first-quarter 2025. This float serves as a low-cost source of capital, which Berkshire has skillfully deployed into high-quality businesses and investments with durable earnings and strong returns, including major stakes in Apple, Coca-Cola, BNSF Railway and various utilities.
The company’s strong financial position also supports consistent share repurchases—an effective capital allocation strategy that enhances shareholder value over the long term.
Berkshire Hathaway’s Return on Capital
Return on equity (“ROE”) in the trailing 12 months was 7.2%, underperforming the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds. It is noteworthy that though BRK.B’s ROE is lagging the industry average, the company has been continuously generating improved ROE.
Image Source: Zacks Investment Research
The same holds true for return on invested capital (ROIC), which has increased every year since 2020. This reflects BRK.B’s efficiency in utilizing funds to generate income. However, ROIC in the trailing 12 months was 5.7%, lower than the industry average of 6%.
Image Source: Zacks Investment Research
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2025 earnings implies a 6.7% year-over-year decrease, while the same for 2026 suggests a 5% increase. The expected long-term earnings growth is pegged at 7%, better than the industry average of 6.8%.
The consensus estimate for 2025 and 2026 earnings witnessed no movement in the past 30 days.
Image Source: Zacks Investment Research
Parting Thoughts on BRK.B Shares
Berkshire Hathaway is a conglomerate with more than 90 subsidiaries engaged in diverse business activities. Thus, holding shares of Berkshire Hathaway renders dynamism to shareholders’ portfolios. BRK.B has delivered significant value to shareholders for almost six decades under the leadership of Buffett.
The focus will now shift to how the behemoth performs when Greg Abel succeeds Warren Buffett as CEO of Berkshire, effective Jan. 1, 2026. Warren Buffett will continue to be the company's executive chairman.
Given Berkshire Hathaway’s premium valuation, unfavorable return on capital and muted analyst sentiments surrounding the company, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock.
Image: Bigstock
Berkshire Stock Falls 8% in 3 Months: Should You Buy the Dip?
Key Takeaways
Shares of Berkshire Hathaway Inc. (BRK.B - Free Report) have lost 7.8% in the past three months, underperforming the industry’s decline of 6.7%, the Finance sector’s increase of 4.8% and the Zacks S&P 500 composite’s increase of 9.1% in the said time frame.
BRK.B is now trending below its 50-day simple moving average (SMA), indicating the possibility of a downside ahead.
Berkshire Vs Industry, Sector, S&P 500
Image Source: Zacks Investment Research
Shares of Chubb Limited (CB - Free Report) and The Progressive Corporation (PGR - Free Report) have lost 4.9% and 4.7% in the past three months, respectively.
Chubb, a prominent global provider of property and casualty insurance and reinsurance, is strategically leveraging growth opportunities within the middle-market segment in both domestic and international arenas. The insurer is driving long-term expansion by strengthening its core package offerings and expanding its portfolio of specialty insurance products. In addition, Chubb continues to invest in key strategic initiatives that support its broader growth objectives and competitive positioning.
Progressive, one of the largest auto insurance groups in the United States, is well-equipped to maintain profitability, supported by its strong market position, broad product suite, and superior underwriting and operational execution. Progressive has refined its strategy to emphasize bundled auto products, limit exposure to high-risk properties, and enhance segmentation through the introduction of innovative, targeted insurance solutions.
BRK.B Shares Are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 1.59, higher than the industry average of 1.55.
Image Source: Zacks Investment Research
Berkshire is relatively cheap compared to Progressive and Chubb.
Average Target Price for BRK.B Suggests Upside
Based on short-term price targets offered by four analysts, the Zacks average price target is $537.75 per share. The average suggests a potential 10.6% upside from the last closing price.
Image Source: Zacks Investment Research
What’s Working in Favor of Berkshire Hathaway?
Berkshire Hathaway’s insurance operations form the core of its business model, accounting for roughly one-quarter of total revenues and serving as a key engine of long-term growth. With extensive market exposure, disciplined pricing and robust underwriting performance, the insurance segment is well-equipped to perform even under adverse market conditions.
Complementing its insurance strength, Berkshire’s diversified structure adds resilience to its overall operations. A major stabilizing force is Berkshire Hathaway Energy (BHE), the company’s energy subsidiary, which focuses heavily on renewable energy. As a regulated utility, BHE generates stable and predictable cash flows that are largely insulated from economic cycles. Its strong financial foundation and long-term commitment to clean energy make it a growing pillar of Berkshire’s future growth in a world rapidly shifting toward electrification and sustainability.
The Utilities and Energy segment is further supported by Burlington Northern Santa Fe (BNSF) though it faces challenges such as a less favorable business mix and declining fuel surcharge income. Still, rising demand for utility services is expected to bolster future performance in this segment.
Berkshire’s Manufacturing, Service, and Retail divisions also stand to gain from an improving economic climate, with heightened consumer activity fueling revenue expansion and margin growth.
Meanwhile, continued growth in the insurance segment has driven the expansion of Berkshire’s insurance float—the pool of premiums held before claims are paid—from approximately $114 billion at the end of 2017 to $173 billion as of first-quarter 2025. This float serves as a low-cost source of capital, which Berkshire has skillfully deployed into high-quality businesses and investments with durable earnings and strong returns, including major stakes in Apple, Coca-Cola, BNSF Railway and various utilities.
The company’s strong financial position also supports consistent share repurchases—an effective capital allocation strategy that enhances shareholder value over the long term.
Berkshire Hathaway’s Return on Capital
Return on equity (“ROE”) in the trailing 12 months was 7.2%, underperforming the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds. It is noteworthy that though BRK.B’s ROE is lagging the industry average, the company has been continuously generating improved ROE.
Image Source: Zacks Investment Research
The same holds true for return on invested capital (ROIC), which has increased every year since 2020. This reflects BRK.B’s efficiency in utilizing funds to generate income. However, ROIC in the trailing 12 months was 5.7%, lower than the industry average of 6%.
Image Source: Zacks Investment Research
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2025 earnings implies a 6.7% year-over-year decrease, while the same for 2026 suggests a 5% increase. The expected long-term earnings growth is pegged at 7%, better than the industry average of 6.8%.
The consensus estimate for 2025 and 2026 earnings witnessed no movement in the past 30 days.
Image Source: Zacks Investment Research
Parting Thoughts on BRK.B Shares
Berkshire Hathaway is a conglomerate with more than 90 subsidiaries engaged in diverse business activities. Thus, holding shares of Berkshire Hathaway renders dynamism to shareholders’ portfolios. BRK.B has delivered significant value to shareholders for almost six decades under the leadership of Buffett.
The focus will now shift to how the behemoth performs when Greg Abel succeeds Warren Buffett as CEO of Berkshire, effective Jan. 1, 2026. Warren Buffett will continue to be the company's executive chairman.
Given Berkshire Hathaway’s premium valuation, unfavorable return on capital and muted analyst sentiments surrounding the company, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.