US Markets
Monday, February 26th, 2024 4:25 pm EDT
Key Points
- Berkshire Hathaway shares experienced a notable increase following the announcement of strong fourth-quarter earnings, with both Class A and Class B shares rising by more than 1.5%. Class A shares have seen a year-to-date increase of over 17%, while Class B shares have surged by more than 18%, leading to an increase in Berkshire’s valuation to $930.1 billion.
- Berkshire reported fourth-quarter operating earnings of $8.481 billion, marking a substantial 28% increase from the previous year, primarily driven by significant gains in its insurance business. This surge in earnings also resulted in a record-high cash reserve for Berkshire, with $167.6 billion held in the fourth quarter, surpassing the previous quarter’s record.
- Despite the positive earnings outlook, some analysts, such as James Shanahan from Edward Jones, believe that Berkshire’s stock may already be fairly valued, suggesting that the potential upside from the conglomerate’s strong earnings forecast is already reflected in its current stock price. Additionally, Warren Buffett’s cautious remarks in his annual letter imply a tempered growth trajectory for Berkshire, with expectations of only slight outperformance compared to the average company, particularly as Berkshire’s net worth approaches 6% of the total S&P 500 companies. Buffett also highlighted the limited impact of future acquisitions on Berkshire’s growth, indicating that only a few businesses are likely to significantly influence the conglomerate’s performance in the future.
Berkshire Hathaway experienced a surge in its shares following the release of robust earnings for the fourth quarter, with both Class A and Class B shares witnessing an increase of over 1.5%. Notably, Class A shares have risen by more than 17% and Class B shares by more than 18% year-to-date, propelling Berkshire’s valuation to $930.1 billion, up from $905.5 billion at Friday’s close. The conglomerate reported fourth-quarter operating earnings of $8.481 billion, marking a substantial 28% increase from the previous year, driven primarily by significant gains in its insurance sector. This surge in earnings has also led to an unprecedented rise in cash reserves, with Berkshire holding $167.6 billion in cash during the fourth quarter, surpassing the previous quarter’s record of $157.2 billion. Despite this positive outlook, some analysts, like James Shanahan from Edward Jones, suggest that the stock may already be fairly valued, implying that the potential upside from Berkshire’s strong earnings forecast might already be factored into its current stock price. Moreover, Warren Buffett’s cautious remarks in his annual letter suggest that Berkshire’s growth trajectory may slow down, as he anticipates only a slight outperformance compared to the average company, particularly as Berkshire’s net worth approaches 6% of the total S&P 500 companies. Buffett highlighted the limited impact of acquisitions on Berkshire’s growth, indicating that only a few businesses are likely to significantly influence the conglomerate’s performance in the future, with the last major deal being the acquisition of Alleghany in 2022 for $11.6 billion.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/26/berkshire-shares-jump-after-big-profit-gain-as-buffetts-conglomerate-nears-1-trillion-valuation.html
