Berkshire Hathaway (BRK.A): Unpacking the Conglomerate’s Valuation After Recent Market Pause

Berkshire Hathaway (BRK.A) has delivered mixed results for investors over the past year, as the stock edged up 6% during that period. Its most recent performance reflects shifting sentiment about the company’s growth outlook.

See our latest analysis for Berkshire Hathaway.

After a steady climb earlier this year, Berkshire Hathaway’s share price has eased slightly in recent weeks. This reflects a pause as investors weigh new growth opportunities against ongoing uncertainties in financial markets. While the stock delivered a solid 6% total shareholder return over the past year, its longer-term trajectory remains impressive and highlights enduring momentum.

If you’re interested in casting a wider net, this is a great moment to discover fast growing stocks with high insider ownership.

With shares only modestly above analysts’ targets and a sizable intrinsic discount remaining, the question now is whether Berkshire Hathaway’s future returns are fully priced in or if an attractive buying opportunity still exists.

Price-to-Earnings of 16.8x: Is it justified?

Berkshire Hathaway currently trades at a price-to-earnings (P/E) ratio of 16.8x, which puts it slightly above the average for the US diversified financial sector and close to its recent closing price of $734,180.

The P/E ratio is a widely watched metric that compares a company’s share price to its per-share earnings, helping investors evaluate whether the stock's price reflects its earnings potential. For a large, diversified conglomerate like Berkshire Hathaway, it signals how much investors are willing to pay for every dollar of profit the company generates.

Compared to its industry peers, the company's P/E ratio is only modestly above the industry average of 16.1x, suggesting the market sees Berkshire as a safer or more reliable option. When compared to its peer group, trading at a lower P/E compared to the peer average of 25.9x indicates the stock could be undervalued by the market, especially given its established profile. Compared to a fair P/E ratio of 19.8x, there is additional runway for valuation to rise if sentiment improves.

Explore the SWS fair ratio for Berkshire Hathaway

Result: Price-to-Earnings of 16.8x (UNDERVALUED)

However, ongoing net income declines and market volatility could challenge Berkshire Hathaway’s near-term valuation. This could potentially limit further share price upside.

Find out about the key risks to this Berkshire Hathaway narrative.

Another View: SWS DCF Model Points to Larger Undervaluation

Beyond multiples, our SWS DCF model provides a different perspective. It estimates Berkshire Hathaway’s fair value at around $1,080,788 per share. This indicates that the current price is trading over 30% below this level. Does this suggest the market might be missing significant longer-term upside?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Berkshire Hathaway for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Berkshire Hathaway Narrative

If you see the story differently or enjoy diving into the numbers yourself, it’s easy to put together your own Berkshire Hathaway narrative in just a few minutes. Do it your way

A great starting point for your Berkshire Hathaway research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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