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Berkshire (BRK.B) Q1 Earnings Up Y/Y on Solid Segment Growth

Zacks Equity Research

Berkshire Hathaway Inc. BRK.B delivered first-quarter operating earnings of $5.6 billion, which increased 5% year over year.

This improvement was mainly attributable to solid results across all segments.

Behind the Headlines

Revenues increased 3.8% year over year to $60.7 billion.

Costs and expenses increased 2.1% year over year to $53.5 billion.

Pre-tax income came in at $27.6 billion, rebounding from the year-ago loss of $1.1 billion.

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise | Berkshire Hathaway Inc. Quote

Segment Results

Berkshire Hathaway’s huge and growing Insurance Operations segment has kept its underwriting profit streak alive for more than 15 years. Revenues from the Insurance group increased 8.4% year over year to $15.8 billion. This segment’s net earnings attributable to Berkshire Hathaway were $1.626 billion, up 14.6% year over year.

Railroad, Utilities and Energy operating revenues grew 2.9% year over year to $10.4 billion owing to higher contribution from both Burlington Northern SantaFe Corp. (BNSF) and Berkshire Hathaway Energy. Net earnings of $1.9 billion were up 7.4% year over year, primarily attributable to a 9.4% increase in the railroad business (driven by higher rates per car/unit and a curtailment gain related to an amendment to a retirement plan, partly offset by lower unit volume) as well as a 3.4% increase from the energy business.

Total revenues at Manufacturing, Service and Retailing rose 1.7% year over year to $34.9 billion. Net earnings grew 3.4% year over year to $2.2 billion.

Financial Position

As of Mar 31, 2019, consolidated shareholders’ equity was $368.8 billion, up 5.9% from the level as of Dec 31, 2018. At quarter-end, cash and cash equivalents were $31,791 billion, up 4.7% from the level at 2018 end.

Berkshire parent company debt was $16.7 billion as on Mar 31, 2019, a decrease of $167 million since Dec 31, 2018.

The company exited the first quarter with a float of about $124 billion, up $1 billion from year-end 2018.

Cash flow from operating activities totaled $7.6 billion, up 0.3% year over year.

Zacks Rank

Berkshire Hathaway currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the same space that have reported first-quarter earnings so far, the bottom-line figures of The Travelers Companies Inc. TRV, The Progressive Corp. PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate.

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