Is Berkshire Hathaway Still Attractive After Leadership Changes and 13.7% Share Price Jump in 2025?

• Wondering if Berkshire Hathaway is a bargain or overpriced right now? You are not alone, as investors everywhere want to dig deeper than just the headline numbers.
• The stock has posted solid gains, rising 2.0% over the past week, 4.8% for the month, and a strong 13.7% year-to-date. This reflects both long-term trust in the business and evolving market sentiment.
• Recent news around Berkshire’s continued strategic investments and high-profile leadership transitions has kept the company in the spotlight. This has fueled both optimism and careful scrutiny among investors. These developments help explain the increased trading activity and shifts in risk appetite seen in the last few weeks.
• As for value, Berkshire Hathaway scores 4 out of 6 on our valuation checklist, showing more undervalued signals than not. Next, we’ll break down what those valuation checks mean. Stick around, because we’ll also reveal a more comprehensive way to look at a company’s true worth.

Berkshire Hathaway delivered 6.1% 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 Model is designed to estimate a company’s intrinsic value by focusing on the profits generated above its cost of capital. This approach calculates how efficiently Berkshire Hathaway reinvests its profits to generate additional returns for shareholders over the long run.

For Berkshire Hathaway, this model uses a Book Value of $485,274.36 per share and a Stable Earnings Per Share (EPS) of $66,154.88, which is based on the company’s median return on equity over the last five years. The cost of equity is $38,878.72 per share, indicating the required return expected by investors. By subtracting this cost from the stable EPS, the model determines an Excess Return of $27,276.15 per share. The company’s average Return on Equity stands at 12.85%, demonstrating strong profitability relative to its equity base. Additionally, the Stable Book Value, incorporating future analyst estimates, is $514,986.06 per share.

Taking all of these factors into account, the Excess Returns Model estimates Berkshire Hathaway’s fair value at $1,150,872 per share. Compared to its current market price, this suggests the stock is trading at a 33.3% discount. This may indicate that investors today are obtaining meaningful value for their investment.

Result: UNDERVALUED

Our Excess Returns analysis suggests Berkshire Hathaway is undervalued by 33.3%. Track this in your watchlist or portfolio, or discover 927 more undervalued stocks based on cash flows.

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

Approach 2: Berkshire Hathaway Price vs Earnings

For profitable companies like Berkshire Hathaway, the Price-to-Earnings (PE) ratio is a widely used valuation metric because it relates the company's current share price to its per-share earnings. This makes it easier to compare value across different companies, especially when profitability is stable and consistent as it is for Berkshire.

The "normal" or fair PE ratio for any company is shaped by factors such as growth expectations and risk. Fast-growing firms or those perceived as less risky tend to command higher PE multiples, since investors are willing to pay more for each dollar of future earnings. Conversely, companies facing greater uncertainties or slower growth usually trade at lower multiples.

Berkshire Hathaway currently trades at a PE ratio of 16.4x. This is above the Diversified Financial industry average of 13.6x, but below the peer group average of 25.0x. To provide a more nuanced perspective, Simply Wall St calculates a proprietary "Fair Ratio" tailored to Berkshire's unique profile. This Fair Ratio, at 17.0x, takes into account the company's earnings growth prospects, profit margins, market size, risk factors, as well as sector and macro trends.

Because the Fair Ratio incorporates these broader dynamics, it offers a more robust valuation benchmark than peer or industry averages alone, which may be influenced by outliers or may not consider company-specific factors like market capitalization or profitability.

Comparing Berkshire's current PE of 16.4x with its Fair Ratio of 17.0x, the stock appears fairly valued at current levels.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 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 Narrative is simply your own story or perspective about a company, which connects the numbers, such as fair value, future revenue, earnings, and margins, to how you think the business will perform.

Narratives link Berkshire Hathaway’s unique story to a financial forecast, helping you translate your beliefs about its strategy, management, or industry trends into a fair value estimate. On the Simply Wall St platform, Narratives are accessible to everyone within the Community page, and millions of investors already use them to compare their expectations to the market price.

By building and following Narratives, investors can decide when to buy or sell by comparing their fair value with Berkshire’s current share price. These Narratives update automatically as new earnings or news emerges, so your analysis always reflects the latest information.

For example, some Berkshire investors take an optimistic view and set a fair value above $1.1 million per share, expecting strong cash deployment and growth. More cautious investors calculate a fair value closer to $600,000 per share, based on stricter assumptions about future margins or management change. Narratives make it easy to see and act on both viewpoints, all in one place.

Do you think there's more to the story for Berkshire Hathaway? Head over to our Community to see what others are saying!

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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