Berkshire Hathaway Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, Berkshire Hathaway Inc. (NYSE:BRK.A) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 5.8% to hit US$94b. Berkshire Hathaway also reported a statutory profit of US$21,122, which was an impressive 39% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Berkshire Hathaway

Taking into account the latest results, Berkshire Hathaway's three analysts currently expect revenues in 2024 to be US$368.7b, approximately in line with the last 12 months. Statutory earnings per share are expected to tumble 33% to US$31,455 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$352.2b and earnings per share (EPS) of US$33,030 in 2024. So it's pretty clear consensus is mixed on Berkshire Hathaway after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.

There's been no major changes to the price target of US$702,750, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Berkshire Hathaway, with the most bullish analyst valuing it at US$759,000 and the most bearish at US$640,000 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Berkshire Hathaway is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 0.8% annualised decline to the end of 2024. That is a notable change from historical growth of 9.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.7% per year. It's pretty clear that Berkshire Hathaway's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Berkshire Hathaway. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Berkshire Hathaway. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Berkshire Hathaway analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Berkshire Hathaway has 1 warning sign we think you should be aware of.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com