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Berkshire (BRK.B) Q2 Earnings Rise on Segmental Strength

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Berkshire Hathaway Inc. BRK.B reported second-quarter 2018 earnings of $6.9 billion, soaring 67.3% year over year. This improvement was mainly attributable to solid results across all segments.

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise

Behind Second Quarter Headlines

Revenues increased 8.6% year over year to $62.2 billion.

Costs and expenses increased 4% year over year to $53.8 billion.

Pretax income came in at $15.1 billion, surging 146% year over year.

Segment Results

Berkshire Hathaway’s huge and growing Insurance Operations segment kept its underwriting profit streak alive for more than 14 years. Revenues from the Insurance group increased 13.9% year over year to $15.5 billion. This segment’s net earnings attributable to Berkshire Hathaway were $2.1 billion, having skyrocketing 121% from the year-ago quarter’s figure.

Railroad, Utilities and Energy operating revenues grew 10.9% year over year to $10.9 billion, owing to higher contribution from both Burlington Northern SantaFe Corp. (BNSF) and Berkshire Hathaway Energy. Net earnings of $1.9 billion were up 28.8% year over year, primarily banking on a 36.6% surge in the bottom line from the railroad business (driven by an expanded unit volume and a lower effective tax rate) as well as a 14.1% increase in the metric from the energy business.

Total revenues at Manufacturing, Service and Retailing rose 4.6% year over year to $33.3 billion. Net earnings increased 28.8% year over year to $2.1billion.

Revenues at the company’s Finance & Financial Products rose 17.3% year over year to $2.4 billion. Net earnings improved 32.8% year over year to $429 million.

Financial Position

As of Jun 30, 2018, consolidated shareholders’ equity was $358.1 billion, up 2.8% from the level as of Dec 31, 2017. At the reported quarter-end, cash, cash equivalents and the U.S. Treasury bills were approximately $111.1 billion, down 4.2% from the level at 2017 end.

As of Jun 30, 2018, Berkshire Hathaway’s book value was $145.11 per share.

The company exited the second quarter with a float of about $116 billion, up 1.8% from the tally at year-end 2017.

Cash flows from operating activities totaled $16.1 billion in the first half of 2018, slumping nearly 40% from the count registered during the same period in 2017.

Zacks Rank

Berkshire Hathaway carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the insurance industry, having already reported second-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s TRV metric missed the same.

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