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Why Is Berkshire Hathaway B (BRK.B) Down 1.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for Berkshire Hathaway B (BRK.B). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Berkshire Hathaway B due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Berkshire Q2 Earnings Up on Solid Segment Results

Berkshire Hathaway delivered second-quarter 2021 operating earnings of $6.7 billion that increased 21.3% year over year.

Improved performance in Insurance and Other, Railroad, Utilities and Energy as well as Manufacturing, Service and Retailing resulted in the upside.

Behind the Headlines

Revenues increased 21.6% year over year to $69.1 billion, attributable to higher revenues from Insurance and Other operations as well as Railroad, Utilities and Energy.

Costs and expenses decreased 0.5% year over year to $60.9 billion.

Segment Results

Berkshire Hathaway’s Insurance and Other segment revenues increased 20.2% year over year to $57.2 billion in the second quarter of 2021 on the back of higher insurance premiums earned, sales and service revenues, leasing revenues.

Railroad, Utilities and Energy operating revenues increased 28.5% year over year to $11.9 billion due to higher freight rail transportation revenues, energy operating revenues, service revenues and other income. Pretax earnings of $2.7 billion were up 34.1% year over year. The second-quarter earnings increase reflected income tax benefits from renewable wind tax equity investments, largely from projects reaching commercial operation, and higher operating revenues from owned solar projects.

Total revenues at Manufacturing, Service and Retailing increased 27.7% year over year to $38.7 billion. Pretax earnings doubled year over year to $3.9 billion.

Financial Position

As of Jun 30, 2021, consolidated shareholders’ equity was $470.4 billion, up 6.1% from the level as of Dec 31, 2020. At quarter end, cash and cash equivalents were $42.3 billion, down 11.9% from the level at 2020 end.

The company exited the second quarter of 2021 with a float of about $142 billion, up 2.9% from the figure at year-end 2020.

Cash flow from operating activities totaled $19.6 billion in the first half of 2021, up 12.1% from the year-ago period.

The company bought back shares worth $6 billion, taking the first-half total to $12.6 billion

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Berkshire Hathaway B has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Berkshire Hathaway B has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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