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Berkshire Hathaway Business Diversity Drives Top-Line Growth

Zacks Equity Research

On Aug 29, we issued an updated research report on Berkshire Hathaway Inc. ( BRK.A) ( BRK.B). The company reported second-quarter operating earnings of $1.75 per share, which were in line with the Zacks Consensus Estimate.  

 

Total revenue came in at $49.8 billion, up 11.3% year over year. The increase was driven by higher contribution from Insurance, Railroad, Utilities and Energy as well as Finance and Financial Products segments. 

 

Berkshire Hathaway’s property and casualty insurance business has been the engine behind its growth, as it has successfully released a huge moat (investible surplus), making numerous acquisitions possible for the company. This strength differentiates Berkshire’s insurance companies from its competitors.

 

Berkshire’s economically sensitive non-insurance businesses – utilities and energy, and manufacturing, service and retail – are performing well and are expected to continue doing so with the economy improving gradually. The utilities and energy business is witnessing substantial growth led by increased revenues from BNSF, the railway which was acquired in Feb 2010. Revenues from BNSF have contributed majorly to the company’s top line.

 

Berkshire’s Finance and Financial Products segment is also performing well after suffering from a soft housing market in the recent past. We expect improving trends in this business segment since the housing market is catching up.

 

Moreover, with Warren Buffett at the helm, the company has created tremendous value for its shareholders over the years. A strong capital position along with Buffett’s unique skills in making the right acquisitions has made Berkshire a conglomerate of more than 80 businesses and an equity stake holder in many big companies. 

 

Other Stocks 

 

Berkshire Hathaway holds a Zacks Rank #3 (Hold). Better-ranked players from the same industry include Global Indemnity plc ( GBLI), AmTrust Financial Services, Inc. ( AFSI) and  Endurance Specialty Holdings Ltd. ( ENH). All of these carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on BRK.B
Read the Full Research Report on BRK.A
Read the Full Research Report on AFSI
Read the Full Research Report on ENH
Read the Full Research Report on GBLI


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