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What's in Store for Berkshire Hathaway's (BRK.B) Q1 Earnings?

Zacks Equity Research

Berkshire Hathaway Inc. BRK.B is slated to report first-quarter 2020 results on May 1, after the closing bell.

Q1 Earnings Estimate

The Zacks Consensus Estimate for first-quarter 2020 earnings per share is pegged at $2.42, indicating growth of 7.1% from the year-ago reported figure.

Key Factors to Note

Berkshire Hathaway’s first-quarter performance is likely to reflect higher premiums, which might have been driven by its solid property and casualty (P&C) business across the U.S. and international markets.

Moreover, the company’s auto insurance unit Geico is likely to have witnessed declining claims amid a reduction in the number of vehicles plying on roads due to the COVID-19 pandemic. The reduction in travel has led to lower claims, which is likely to have benefited Berkshire Hathaway’s performance in the to-be-reported quarter.

Moreover, the company’s non-insurance businesses are likely to have contributed to the first-quarter performance. Increased average revenue per car/unit is might have aided earnings of the company’s railroad business. The Utilities and Energy business is likely to have gained from solid growth prospects of its energy projects. Strong demand for industrial, building and consumer products is likely to have boosted revenues of the company’s Manufacturing, Service and Retail business.

Furthermore, robust capital position is likely to have aided Berkshire Hathaway in undertaking several buyouts, which in turn is likely to get reflected in the first-quarter results.

However, high costs incurred across its P&C business, primarily due to losses and loss adjustment expenses and underwriting expenses are likely to have hampered the company’s margin expansion in the to-be-reported quarter.

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. price-eps-surprise | Berkshire Hathaway Inc. Quote

Earnings Surprise History

Berkshire Hathaway surpassed estimates in one of the trailing four quarters. It has a trailing four-quarter negative earnings surprise of 6.55%, on average.

What Our Quantitative Model Predicts

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 that’s not the case here

Earnings ESP: Berkshire Hathaway has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks worth considering from the insurance space with a right combination to surpass estimates in the upcoming quarterly releases are as follows

The Allstate Corporation ALL has an Earnings ESP of +2.18% and a Zacks Rank #2. The company is scheduled to release first-quarter 2020 earnings on May 5.

Assurant, Inc. AIZ has an Earnings ESP of +4.28% and a Zacks Rank of 3, at present. The company is slated to announce first-quarter 2020 earnings on May 5.

American International Group, Inc. AIG has an Earnings ESP of +1.60% and a Zacks Rank #3. The company is slated to announce first-quarter 2020 earnings on May 4.

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