While some might not be familiar with the name of '
Berkshire Hathaway (
' every investor has undoubtedly heard of the man at the helm of
this company, Warren Buffett. The current CEO and Chairman, Buffett
has guided Berkshire from a small textile company into the massive
conglomerate it is today.
Berkshire in Focus
Today, Berkshire Hathaway engages in a number of businesses, but
has a focus on property and casualty insurance. The company uses
the premiums from this business, before claims are paid out (called
the 'float'), to buy up investments in other industries.
While the firm does have a number of wholly-owned
companies-including railroads, newspapers, and clothing companies
just to name a few-it also has big holdings in several of the most
easily recognizable American brands too. These include firms like
American Express (
the Coca-Cola Company (
International Business Machines (
, although the list stretches far beyond this trio.
Either way, as primarily an insurance business that has had great
success in its investment portfolio, the company is also benefiting
from recent trends in the space. A wider spread between long and
short term rates has certainly helped the company, while a booming
stock market has also increased Berkshire's value.
Earnings in Focus
Thanks to this trend, BRK.B is looking pretty good from an earnings
estimate revisions picture. Analysts have recently bumped up their
expectations for the company, including one increase in just the
past seven days.
Now, the consensus full year earnings estimate for Berkshire is at
$5.79/share, a modest increase from the $5.66 that was seen two
months ago. Meanwhile, year-over-year growth looks to be just under
14% for the full year, a pretty solid figure for a company with a
$280 billion market cap.
BRK.B also has a great track record when it comes to earnings dates
too. The company has beaten in each of the last four quarters,
including three double digit surprises in the last four releases,
so increased expectations should be no problem for this company.
And if that wasn't enough, investors should note that the Zacks
Industry Rank for the Insurance Property & Casualty space is
quite favorable. The current rank for this segment is 36 out of
260, suggesting that there are few sectors that are better
positioned than insurance at this time.
Due to these factors, Berkshire Hathaway has earned itself a Zacks
Rank #1 (Strong Buy). This means that we are looking for the stock
to outperform its peers, and continue to post solid gains in the
Insurance is a great business to be in right now as there are
several positive trends in this space. Not only is a bigger spread
helping this segment, but a solid stock market is also assisting
the sector as well.
This makes an investment in a top Ranked insurance company a very
intriguing idea, especially if these current trends continue. And
considering that Berkshire is world-class and is seeing solid
earnings estimate revisions, this company could definitely be the
way to play the trend in the near-term.
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