Evaluating Berkshire Hathaway Stock After Recent Dip and Insurance Sector Moves in 2025

Are you staring at Berkshire Hathaway stock and wondering if now is the right time to buy, sell, or simply hold tight? You are definitely not alone. With its reputation as the ultimate blue-chip play and a five-year return of 139.1%, this stock continues to attract both seasoned investors and newcomers alike. But even stocks backed by Warren Buffett can experience bumps in the road. Over the past month, Berkshire's share price dipped 2.3%, while the most recent week saw a more modest slide of 1.1%.

Zoom out a bit, though, and the story shifts from short-term jitters to long-term confidence. Berkshire’s year-to-date gain stands at 8.5%, with a solid 6.4% increase over the past year and a robust 64.6% climb in the last three years. Recent headlines have focused on Berkshire’s bold moves in the insurance sector, as well as its steady adjustments within its mammoth stock portfolio. These developments have kept the company in the news and seem to be shaping investors’ sense of both opportunity and risk, reflecting in those short-term price swings.

Of course, the big question on everyone’s mind is valuation. Based on our latest model, Berkshire Hathaway scores 4 out of 6 on our undervaluation checklist, suggesting some areas of opportunity, but not without caveats. Let’s break down the most common approaches to valuing this iconic company, then talk about why looking beyond the numbers could offer the best perspective yet.

Berkshire Hathaway delivered 6.4% returns over the last year. See how this stacks up to the rest of the Diversified Financial industry.

Approach 1: Berkshire Hathaway Excess Returns Analysis

The Excess Returns valuation model measures how efficiently a company generates returns on its invested capital compared to the cost of that capital. The idea is straightforward: if a company consistently earns more on its equity than the cost of equity, it creates value for shareholders above and beyond the underlying assets.

For Berkshire Hathaway, this model starts with a strong Book Value of $464,307.83 per share and a Stable EPS of $64,295.28 per share, calculated as the median return on equity from the past five years. The cost of equity, effectively the minimum required return by investors, stands at $37,741.61 per share. The result is an annual Excess Return of $26,553.66 per share with an average Return on Equity of 13.00%.

Looking toward the future, analysts estimate a Stable Book Value of $494,433.12 per share for Berkshire, based on weighted projections. This solid financial and operational footing means the Excess Returns model assigns a strong intrinsic valuation to Berkshire Hathaway’s stock. This suggests the company’s capacity to deliver value remains robust.

According to this analysis, Berkshire Hathaway trades at a 32.0% discount to its intrinsic value. This signals that the stock is undervalued relative to the underlying business fundamentals.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Berkshire Hathaway.

Our Excess Returns analysis suggests Berkshire Hathaway is undervalued by 32.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Berkshire Hathaway Price vs Earnings

The price-to-earnings (PE) ratio is a widely favored valuation metric for profitable companies like Berkshire Hathaway because it directly connects a company’s current market price to its actual earnings power. This measure is especially useful for established firms with consistent profit streams, helping investors assess whether the stock’s current price reflects reasonable growth expectations and business stability.

Generally, a company expected to grow faster or carry less risk will command a higher PE ratio, while slower growth or higher perceived risk tends to justify a lower multiple. For Berkshire Hathaway, the current PE ratio stands at 16.8x. By comparison, the industry average sits slightly lower at 16.6x, while the average among peers is notably higher at 28.1x. This places Berkshire roughly in line with its industry but well below its peer group, suggesting the market is pricing the stock more conservatively than some competitors.

Simply Wall St's Fair Ratio provides an even sharper lens. The Fair Ratio adjusts the expected PE by factoring in not just industry averages but also Berkshire’s individual characteristics such as its earnings growth, profit margin, market capitalization and risk profile. This proprietary approach helps cut through the noise of simple peer or industry comparisons and offers a tailored view of what would be reasonable for Berkshire specifically. In this case, the Fair Ratio for Berkshire is 19.7x, versus its actual 16.8x. With Berkshire trading below its Fair Ratio by a margin that suggests a meaningful discount, the multiple points to the stock being undervalued on this basis.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Berkshire Hathaway Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a powerful but approachable method for framing investment choices on Simply Wall St's platform.

A Narrative is your personal story and perspective on a company, pairing your expectations about its future (such as revenue, earnings, and fair value) with the context behind those numbers. This is the “why” behind your forecast.

This approach links the company’s story, often informed by recent news or earnings, directly to a financial forecast and fair value estimate. It becomes much more intuitive to see how changes in business fundamentals might impact your investment thesis.

Narratives are easy to create and update within the Community page, enabling millions of investors to track their views and see how fair value compares to the current market price. When events like new quarterly results or major news are released, Narratives update dynamically so your analysis stays relevant and actionable.

For example, different investors looking at Berkshire Hathaway right now have Narratives that value the stock as high as $943,785.74 per share or as low as $604,196.40 per share. These figures reflect distinct perspectives on its future growth, risks, and management strategy. With Narratives, deciding when to buy or sell becomes a decision rooted not just in numbers, but in a transparent, evolving investment story tailored by you.

For Berkshire Hathaway, we’ll make it really easy for you with previews of two leading Berkshire Hathaway Narratives:

• 🐂 Berkshire Hathaway Bull Case

  Fair Value: $943,785.74

  Berkshire is trading at a 22.4% discount (fair value minus current price, divided by fair value).

  Revenue Growth Rate: 13%

  • Highlights Berkshire Hathaway’s fortress-like financials, including a robust balance sheet and massive cash reserves used strategically for investment opportunities.
  • Praises a proven, disciplined value investment approach that has delivered strong long-term returns and should endure with succession to Greg Abel.
  • Projects share price growth of 12-15% over the next few years, driven by strong fundamentals and leadership continuity.
• 🐻 Berkshire Hathaway Bear Case

  Fair Value: $604,196.40

  Berkshire is trading at a 21.3% premium (current price minus fair value, divided by fair value).

  Revenue Growth Rate: 3.6%

  • Argues that Berkshire’s shift toward a larger cash position reflects caution, with limited avenues for rapid growth in most key business segments.
  • Highlights risks in replicating past success following a leadership transition and acknowledges that size and maturity may limit future returns relative to the broader market.
  • Forecasts stable but modest revenue growth and expects ongoing buybacks, but believes current valuations are above intrinsic value.

Do you think there's more to the story for Berkshire Hathaway? Create your own Narrative to let the Community know!

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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