What We Thought of Berkshire Hathaway’s Earnings
Berkshire Hathaway BRK.A/BRK.B reported adjusted fourth-quarter operating results that were in our range of expectations. We are leaving our fair value estimates of $700,000 per Class A share and $467 per Class B share in place.
Revenue, including unrealized and realized gains/losses from investment portfolios, declined 22.1% to $101.5 billion for the quarter and 3.4% to $424.2 billion for the year from the year-ago periods. Excluding the impact of investment gains/losses and other adjustments, fourth-quarter operating revenue increased 1.6% year over year to $94.9 billion, and full-year OR increased 1.9% year over year to $371.4 billion.
Operating earnings, exclusive of investment gains/losses, increased 71.3% (27%) year over year to $14.5 billion ($47.4 billion) during the December quarter (full year). Insurance underwriting results continued to be strong, and the company benefited from a large increase in investment income, given its increased ownership in Treasury bills during the year. When including the impact of the investment gains/losses, reported operating earnings declined 47.6% (7.5%) during the fourth quarter (full year) to $19.7 billion ($89 billion).
Key Morningstar Metrics for Berkshire Hathaway
- Class A Share Fair Value Estimate: $700,000.00
- Class B Share Fair Value Estimate: $467.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Low
Book value per share (which still serves as a decent proxy for measuring changes in intrinsic value) increased 1% sequentially and 16% year over year to $451,507 from $446,906 and $389,372 at the end of September 2024 and December 2023, respectively.
Berkshire repurchased $2.9 billion of its common stock during 2024 (but none in the third and fourth quarters) and committed $3.9 billion ($2.9 billion in cash and the remainder in Class B shares) to buy out the noncontrolling interests in Berkshire Hathaway Energy in the fourth quarter. The company closed out the fourth quarter with a record $321.4 billion in cash and cash equivalents, up from $310.3 billion at the end of September 2024, and by our estimates had around $279.9 billion in dry powder.
