We are reiterating our Outperform recommendation on
Berkshire Hathaway Inc.
) reflecting our continued optimism about the company's growth
prospects. Berkshire carries a Zacks Rank #1 (Strong
Berkshire has shown a strong operating performance over the
past many quarters, with growth coming in from all its
Berkshire's property and casualty insurance business has been
the engine behind its growth. The company's insurance business
maintains capital strength at exceptionally high levels. This
strength differentiates Berkshire's insurance companies from its
Berkshire's economically sensitive non-insurance businesses -
utilities and energy, and manufacturing, service and retail - are
performing well after suffering substantial earnings decline in
the recent past due to the weak economy. The utilities and energy
business is witnessing a substantial growth led by increased
revenues from BNSF, the railway which was acquired in February
2010. Revenue from BNSF has been a major contributor to the
Berkshire's Finance and Financial Products segment is also
performing well after suffering from the soft housing market in
the recent past. We expect improving trends in this business
segment given that the housing market is improving gradually.
Moreover, Warren Buffett's unique skills have created
tremendous value for shareholders. A strong capital position
along with his unique skills in making the right acquisitions has
made Berkshire a conglomerate which consists of more than 80
business and equity stakes in many big companies.
With respect to earnings performance, the company delivered
positive surprise in the last 4 quarters with an average beat of
23.6%. We expect the trend to continue riding on its strength
when its reports third quarter results. The Zacks Consensus
Estimate for the third quarter is currently pegged at $1.60,
representing a year-over-year improvement of 1.3%. The expected
long term growth for the company is 7%.
Other players from the same industry such as
Everest Re Group Ltd.
Selective Insurance Group Inc.
), all carrying Zacks Rank #1(Strong Buy) are worth
BERKSHIRE HTH-A (BRK.A): Free Stock Analysis
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
SELECT INS GRP (SIGI): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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