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Berkshire (BRK.B) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Berkshire Hathaway Inc. BRK.B delivered negative surprise in the last two reported quarters of 2019. The Zacks Consensus Estimate for the third quarter of 2019 is pegged at $2.78 per share, indicating a decrease of 0.4% from the year-ago quarter reported figure.

Berkshire Hathaway’s third-quarter results are likely to benefit from improved performances across segments.

The company is the second largest property and casualty insurance company in terms of premium volumes. Its property and casualty insurance business generates maximum return on equity. A not-so-active catastrophe environment is likely to have aided underwriting profitability and combined ratio. Better pricing, compelling product portfolio, prudent underwriting and increase in policy writing is expected to have aided premiums. Continued insurance business growth is likely to have increased float.

Higher revenue contribution from Burlington Northern SantaFe Corp. is expected to have aided Utilities and Energy business performance.

A likely increase in unit volume and higher average revenue per car/unit is expected to have aided earnings of railroad business.

Berkshire Hathaway’s Finance and Financial Products segment units — CORT (furniture) and XTRA (semi-trailers) — are industry leaders. These have been witnessing considerable improvement in earnings with recovery in the soft housing market. Given an improving macro backdrop, these units are likely to deliver better results.

Strategic acquisitions are expected to support results.

However, expenses are likely to have hampered margin expansion.

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. Price and EPS Surprise

What Our Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Berkshire Hathaway this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But this is not the case as you can see below.

Earnings ESP: Berkshire Hathaway has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate as well as the Zacks Consensus Estimate is pegged at $2.78. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks to Consider

Some stocks from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:

Brighthouse Financial BHF has an Earnings ESP of +0.56% and a Zacks Rank of 3. The company is slated to announce third-quarter earnings on Nov 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hallmark Financial Services HALL has an Earnings ESP of +3.03% and a Zacks Rank of 2.

Lincoln National Corporation LNC is set to report third-quarter earnings on Oct 30. The company has an Earnings ESP of +0.65% and a Zacks Rank #3.

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Click to get this free report Lincoln National Corporation (LNC) : Free Stock Analysis Report Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report To read this article on Zacks.com click here.