Today we’re going to take a look at the well-established Berkshire Hathaway Inc (NYSE:BRK.A). The company’s stock maintained its current share price over the past couple of month on the NYSE, with a relatively tight range of $281600 to $307600. However, does this price actually reflect the true 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. View out our latest analysis for Berkshire Hathaway
What is Berkshire Hathaway worth?The stock is currently trading at US$281,600 on the share market, which means it is overvalued by 57.83% compared to my intrinsic value of $178417.56. Not the best news for investors looking to buy! Another thing to keep in mind is that Berkshire Hathaway’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Berkshire Hathaway?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. 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? If you believe BRK.A should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on BRK.A for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
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.