Assessing Berkshire Hathaway (BRK.B) Valuation After Recent Share Price Weakness
Recent share performance and business scale
Berkshire Hathaway (BRK.B) shares have seen negative total returns over the past year, with a 12‑month total return of around a 12% decline, alongside a one‑month return of about a 1% decline.
Over longer periods, the company reports total returns of about 43% over 3 years and roughly 71% over 5 years. The stock last closed at US$469.32, with a market value of about US$1.02 trillion.
The group recorded revenue of about US$371.4 billion and net income of roughly US$66.97 billion, reflecting the scale of its diversified operations across insurance, transportation, energy, manufacturing, and retail‑oriented businesses.
See our latest analysis for Berkshire Hathaway.
Recent trading suggests momentum has cooled, with a year to date share price return of about a 6% decline and a 1 year total shareholder return of roughly a 12% decline despite stronger results over 3 and 5 years.
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With Berkshire Hathaway trading below some analyst targets and sitting on a business that spans insurance, rail, energy, and consumer brands, you now have to ask: is this a buying opportunity, or is the market already pricing in future growth?
Preferred P/E of 15.1x: Is it justified?
On current numbers, Berkshire Hathaway trades on a P/E of 15.1x, which sits below both the peer average of 23.1x and the US Diversified Financial industry average of 16.9x, even though the share price is at $469.32.
The P/E multiple compares the share price to earnings per share and is a simple way of seeing how much investors are paying for each dollar of profit. For a diversified group with insurance, rail, energy and manufacturing operations, earnings power and profit quality tend to matter more than headline revenue growth when thinking about this metric.
According to Simply Wall St, Berkshire Hathaway also screens as good value relative to peers and industry, and the current P/E is below an estimated fair P/E of 16.7x. That suggests the market is applying a lower earnings multiple than the regression based fair level it could move toward if conditions and sentiment align.
On top of that, the shares are flagged as trading at 41.2% below an internal estimate of fair value based on future cash flows, with the SWS DCF model indicating a fair value of $798.08 compared with the current $469.32. The DCF approach projects future cash flows and discounts them back to today, which can be useful for a large, cash generative group where short term earnings swings do not always tell the whole story.
Explore the SWS fair ratio for Berkshire Hathaway
Result: Price-to-earnings of 15.1x (UNDERVALUED)
However, a 12% 1 year total return decline and annual net income growth of 3.5% in the opposite direction of revenue growth could keep pressure on sentiment.
Find out about the key risks to this Berkshire Hathaway narrative.
Another angle on what the price is saying
While the SWS DCF model points to Berkshire Hathaway trading at a 41.2% discount to an internal fair value estimate of $798.08, that result still depends heavily on long term cash flow assumptions. The question for you is whether that gap reflects mispricing or simply caution about future earnings trends.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Berkshire Hathaway for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 56 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Looking at the mixed signals around price, returns, and valuation, it makes sense to move quickly, review the underlying data, and decide where you stand. This is especially important given that there are both concerns and positives flagged by current analysis, so it is worth weighing 2 key rewards and 1 important warning sign
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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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