Markets

Berkshire Hathaway Inc. (BRK.B) Gains But Lags Market: What You Should Know

In the latest trading session, Berkshire Hathaway Inc. (BRK.B) closed at $190.56, marking a +0.45% move from the previous day. The stock lagged the S&P 500's daily gain of 0.91%. Elsewhere, the Dow gained 0.85%, while the tech-heavy Nasdaq added 0.59%.

Prior to today's trading, shares of the company had gained 4.06% over the past month. This has outpaced the Finance sector's gain of 0.97% and lagged the S&P 500's gain of 5.26% in that time.

Wall Street will be looking for positivity from BRK.B as it approaches its next earnings report date. The company is expected to report EPS of $2.10, down 16% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.63 per share and revenue of $195.44 billion. These totals would mark changes of -1.53% and -23.24%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for BRK.B. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 2.67% higher. BRK.B is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, BRK.B is holding a Forward P/E ratio of 19.71. For comparison, its industry has an average Forward P/E of 13.43, which means BRK.B is trading at a premium to the group.

Meanwhile, BRK.B's PEG ratio is currently 2.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Insurance - Property and Casualty industry currently had an average PEG ratio of 2.2 as of yesterday's close.

The Insurance - Property and Casualty industry is part of the Finance sector. This group has a Zacks Industry Rank of 188, putting it in the bottom 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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