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Berkshire Hathaway (BRK.B) Up 5.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Berkshire Hathaway Inc. (BRK.B - Free Report) . Shares have added about 5.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Berkshire Hathaway Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

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

Berkshire Hathaway 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Berkshire Hathaway has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Berkshire Hathaway Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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