Berkshire Hathaway Inc. (BRK.B) Buy or Sell Stock Guide

January 15, 2020

Are you looking for the analysis of Berkshire Hathaway Inc. (BRK.B) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 6 reasons to buy and 6 reasons to sell BRK.B stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about BRK.B stock:

  • Is BRK.B a buy or a sell?
  • Should I sell or hold BRK.B stock today?
  • Is BRK.B a good buy / investment?
  • What are BRK.B analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy BRK.B stock:

1. Berkshire Hathaway has a great portfolio of companies. Its inorganic growth story seems impressive and is expected to be accretive to earnings going forward. Its investment history boasts stakes at Apple, the four biggest U.S. airlines, Precision Castparts, Kraft Heinz, pipeline operator Kinder Morgan, Visa, and Bank of New York Mellon among others.

2. Growing insurance business, strategic acquisitions, and a sturdy capital level should continue to drive Berkshire's shares higher. With a huge cash hoard, we believe Berkshire Hathaway will successfully continue its acquisition spree. Also, analysts think Berkshire's earnings will grow in 2019 and 2020.

3. Book value per share, which is a good proxy for measuring changes in Berkshire's intrinsic value, increased at an astounding compounded growth rate (CAGR) of 19.0% in the past five decades. The stock is currently trading at the lowest price to book value since 2012. Berkshire's stock performance has been equally strong outpacing S&P 500 index by a substantial margin.

4. BRK.B profitability is improving. The YoY profit margin change was 7.56 percentage points. See BRK.B profitability chart.

5. BRK.B Price/Book ratio is 0.00, and it’s low compared to its industry peers’ P/B ratios. See BRK.B forward Price/Book ratio chart.

6. BRK.B PEG ratio (P/E adjusted for growth) is 0.94, and it’s low compared to its industry peers’ PEG ratios. See BRK.B PEG chart.

Now that you understand the bull case, let’s look at the reasons to sell BRK.B stock (i.e., the bear case):

1. Berkshire's insurance operation faces competition and pronounced cyclicality which occasionally produces large losses. Much of its other operations are economically sensitive and focused more on the U.S. market.

2. Given the size and scale of its operations, Berkshire's biggest hurdle longer term will be its ability to consistently find deals that not only add value but are large enough to be meaningful.

3. The other big issue facing the firm is the longevity of chairman and CEO Warren Buffett (who turns 89 in August) and managing partner Charlie Munger (who turned 95 in January).

4. BRK.B stock price ($227.63) is close to the 52-week high ($228.65). Perhaps now is a good time to sell? See BRK.B price chart.

5. BRK.B quarterly revenue growth was 2.50%, lower than the industry and sector average revenue growth (3.50% and 3.46%, respectively). See BRK.B revenue growth chart.

6. BRK.B short interest (days to cover the shorts) ratio is 4.3. The stock garners more short interest than the average industry, sector or S&P 500 stock. See BRK.B short interest ratio chart.

Now let's look at the key statistics for BRK.B:

Metrics BRK.B
Price $226.85
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 0.00%
Industry Insurance - Diversified
Sector Financial Services
Number of Employees 389,000
Market Cap $555.57B
Forward P/E Ratio 21.31
Price/Book Ratio 2.19
Revenue (TTM) $253.58B
YoY Quarterly Revenue Growth 2.50%
Profit Margin 10.60%

What are your thoughts on BRK.B?

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