Today we’re going to take a look at the well-established Berkshire Hathaway Inc (NYSE:BRK.A). The company’s stock saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $325915 and falling to the lows of $288000. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Berkshire Hathaway’s current trading price of $295891 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Berkshire Hathaway’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Berkshire Hathaway
What is Berkshire Hathaway worth?Great news for investors – Berkshire Hathaway is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $370916.22, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Berkshire Hathaway’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Berkshire Hathaway look like?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Berkshire Hathaway, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although BRK.A is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to BRK.A, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on BRK.A for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Berkshire Hathaway. You can find everything you need to know about Berkshire Hathaway in the latest infographic research report. If you are no longer interested in Berkshire Hathaway, you can use our free platform to see my list of over 50 other stocks with a high growth potential.