Will Berkshire Hathaway Slay in Q3 Earnings?

Warren Buffett’s Berkshire Hathaway (BRK.B) is expected to release third-quarter 2021 earnings on November 5.

The company engages in a variety of industries, including insurance, manufacturing, retailing, energy, utilities, and railroad, among others.

The company’s class B shares have increased almost 39% in the past year, trading at over $287.  (See Berkshire Hathaway Dividend Date and History on TipRanks)

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Berkshire Hathaway’s Prior Quarter Snapshot

The investment conglomerate posted solid second-quarter results, benefiting from the reopening of the economy.

In the second quarter, Berkshire Hathaway recorded operating profits of $6.69 billion, up 21% year-over-year.

Meanwhile, net earnings grew 6.8% year-over-year to $28 billion in the second quarter.

Points to watch

The company's various businesses are likely to benefit in the upcoming quarter from an upswing in economic activity.

In Q2, earnings for Railways, Utilities, and Energy businesses climbed by more than 27% year-over-year to $2.26 billion, owing to increased shipping and transportation activity. In addition, the conglomerate's other companies, such as Homebuilders, also witnessed growth. To top it off, the corporation stated that businesses in its Insurance segment were also rapidly rebounding from the harm caused by the COVID problem.

As demand continues to recover, revenue and profits should increase for the company in the upcoming quarter.

Berkshire Hathaway also has a lot of cash in hand right now. At the end of the second quarter, the company had cash & cash equivalents, including short-term investments, of $144.1 billion.

Notably, the corporation has not lately used the funds to make any significant purchases. Instead, the company used this massive sum of cash to buy back shares. The corporation repurchased $6 billion of its own shares in Q2, bringing the six-month total to $12.6 billion.

Despite the fact that several of Berkshire Hathaway's businesses had witnessed strong growth in Q2 as a result of the economic recovery, the firm warned the investors about the impact of COVID, noting that "risks and uncertainties resulting from the pandemic” might have a negative influence on the firm's future profits and cash flows. Indeed, four of the company's risk categories stand above those of other companies in the same sector. (See Berkshire Hathaway Risk Factors on TipRanks)

Though the impending earnings reports may have an impact on the company's stock price, investors should keep in mind that Berkshire's size and diversification make it unlikely that a disappointing report would harm the company's future prospects.

Wall Street’s Take

On TipRanks, Berkshire Hathaway stock commands a Moderate Buy consensus rating, based on 1 Buy and 1 Hold.

As for price targets, the average BRK.B price target of $328 implies around 14% upside potential from the current levels.

Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.

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