Finance and insurance conglomerate Berkshire Hathaway (BRK.B) will round out this week’s earnings lineup in a shortened week of trading.
Still, there is much anticipation for the renowned holding company’s fourth-quarter earnings report on Friday, February 24.
Sentiment
Trading at $303, BRK.B shares are only 16% from their 52-week highs but investors are anxious as there hasn’t been overwhelming momentum for the stock or other well-known financial conglomerates such as BlackRock (BLK) and Goldman Sachs (GS) to start the new year.
On that note, only Goldman Sachs’ year-to-date performance has topped the S&P 500 with Berkshire and BlackRock trailing the broader market. However, Berkshire’s stock does carry a “B” Style Scores grade for Momentum going into its Q4 report and strong results could be a significant catalyst for the stock.
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Q4 Preview & Outlook
Berkshire’s Q4 earnings are projected at $3.31 per share, which would be up 1% year over year. The Zacks Surprise Prediction indicates Berkshire should reach quarterly expectations on its bottom line with the Most Accurate Estimate also having Q4 EPS at $3.31 a share. Sales for the quarter are expected to be $74.56 billion, up 4% from the prior year quarter.
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Rounding out Berkshire’s fiscal 2022 earnings are now forecasted to climb 22% to $14.85 a share compared to EPS of $12.12 in 2021. Earnings are expected to rise another 12% in FY23 to $16.62 a share.
Earnings estimate revisions have remained the same throughout the quarter. On the top line, sales are now forecasted to be up 8% for FY22 and rise another 2% in FY23 at $305.90 billion.
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Performance & Valuation
Despite its lackluster year-to-date performance, Berkshire stock has held up better than the broader market over the last year. Berkshire is only down -2% in the last 12 months to top the S&P 500’s -6%, and BlackRock’s -7% but trail Goldman Sachs +6%.
Even better, over the last decade, Berkshires +197% has topped Blackrock, Goldman Sachs, and the benchmark.
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At its current levels, BRK.B trades at 18.2X forward earnings which is above the industry average of 13.5X but Berkshire is an industry leader. Plus, Berkshire’s stock trades 40% below its decade-long high of 30.4X and at a 10% discount to the median of 20.3X.
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Bottom Line
Berkshire Hathaway’s (BRK.B) stock currently lands a Zacks Rank #3 (Hold) going into its Q4 report. Holding on to shares of BRK.B at their current levels could be rewarding with the stock trading attractively relative to its past from a valuation standpoint.
With that being said, much of the upside potential in BRK.B stock largely depends on Berkshire illustrating its bottom line will remain robust in correlation with positive guidance.
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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
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BlackRock, Inc. (BLK) : Free Stock Analysis Report
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