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Berkshire Hathaway Inc. (BRK.B) Up 0.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Berkshire Hathaway Inc. (BRK.B - Free Report) . Shares have added about 0.8% 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 the most recent earnings report in order to get a better handle on the important drivers.

Berkshire Hathaway’s Q2 Earnings Down on Soft Insurance Results

Berkshire Hathaway delivered second-quarter operating earnings of $6.1 billion, which decreased 10.9% year over year.

This decline was mainly due to weak insurance business results.

Behind the Headlines

Revenues increased 2.2% year over year to $60.7 billion.

Costs and expenses increased 4.1% year over year to $56 billion.

Pre-tax income came in at $17.8 billion, up 17.6% year over year.

Segment Results

Berkshire Hathaway’s huge and growing Insurance Operations segment has kept its underwriting profit streak alive for more than 15 years. Revenues from the Insurance group increased 6.2% year over year to $16.5 billion. This segment’s net earnings attributable to Berkshire Hathaway were $1.719 billion, down 17.6% year over year.

Railroad, Utilities and Energy operating revenues decreased 1.1% year over year to $10.9 billion owing to higher contribution from Burlington Northern SantaFe Corp. (BNSF). Net earnings of $1.9 billion were up 2.9% year over year on 2.2% increase from railroad business as well as a 4.5% increase from the utilities and energy business.

Total revenues at Manufacturing, Service and Retailing rose 1.2% year over year to $36.1 billion. Net earnings grew marginally year over year to $2.5 billion.

Financial Position

As of Jun 30, 2019, consolidated shareholders’ equity was $386.4 billion, up 9.6% from the level as of Dec 31, 2018. At quarter-end, cash and cash equivalents were $44.6 billion, up 47% from the level at 2018 end.

Berkshire Hathaway’s debt was $99.907 billion as on Jun 30, 2019, a 2.5% increase since Dec 31, 2018.

The company exited the second quarter with a float of about $125 billion, up $2 billion from year-end 2018.

Cash flow from operating activities totaled $16.8 billion, up 4.2% year over year.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Berkshire Hathaway Inc. has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Berkshire Hathaway Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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