Back to top

Image: Bigstock

Berkshire Hathaway (BRK.B) Hits $1 Trillion Market Cap, Time to Buy its Stock?

Read MoreHide Full Article

Berkshire Hathaway (BRK.B - Free Report)  became the first non-tech stock to hit a trillion-dollar market cap today, joining the likes of Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Nvidia (NVDA - Free Report) , and Amazon (AMZN - Free Report) .

Led by its famous CEO and renowned investor Warren Buffett, Berkshire has continued its compelling expansion as a holding company that owns more than 90 subsidiaries in insurance, railroads, utilities, and manufacturing services among other lucrative markets.

Zacks Investment Research
Image Source: Zacks Investment Research

Berkshire’s Acquisition History

Founded in 1889, Buffett took a controlling stake in Berkshire Hathaway in 1965. Berkshire has acquired or taken a majority stake in many lucrative companies throughout its history with the largest (not including debt) being the 2016 acquisition of industrial goods manufacturer Precision Castparts for $37.2 billion.

Other Lucrative Acquisitions

Geico Insurance (Acquired in 1995 for $2.3 billion)

General Reinsurance (Acquired in 1998 for $22 billion)

Pacificorp (Electric power distributor acquired in 2006 for $9.4 billion)

Marmon Holdings (Industrial manufacturing services company acquired in 2008 for $4.5 billion)

Burlington Northern Santa Fe (Railway company acquired in 2009 for $34 billion)

Lubrizol (Chemical products company acquired in 2011 for $9.7 billion)

Heinz (Iconic ketchup maker acquired in 2013 for $28 billion and merged to form Kraft Heinz (KHC - Free Report) )

NV Energy (Utility company acquired in 2013 for $5.6 billion)

Duracell (Iconic battery maker acquired in 2014 for $4.7 billion)

Dominion Energy (Natural gas and storage company acquired in 2020 for $10 billion)  

Pilot Flying J (Travel center chain and diesel fuel distributor acquired in 2023 for $13.6 billion)

Berkshire’s Growth Trajectory

Based on Zacks estimates, Berkshire’s total sales are expected to increase 1% in fiscal 2024 and FY25 with projections over $368 billion. Berkshire’s bottom line is projected to expand 15% this year and is expected to rise another 1% in FY25 to $19.86 per share.

Zacks Investment Research
Image Source: Zacks Investment Research

Berkshire’s Strong Balance Sheet

As a cash cow, Berkshire currently has $42.32 billion in cash and equivalents with a liquidity peak of $88.18 billion in 2021. Furthermore, Berkshire is thought to have over $900 billion in total assets compared to $500 billion in total liabilities.

Zacks Investment Research
Image Source: Zacks Investment Research

Price Performance & Valuation Comparison

Berkshire’s stock has soared +30% year to date to top the S&P 500’s +18% and all of its trillion-dollar market cap peers outside of Nvidia. Over the last three years, Berkshire is sitting on +60% gains which has also outperformed the broader market while trailing Nvidia but topping Apple, Amazon, and Microsoft.

Zacks Investment Research
Image Source: Zacks Investment Research

Trading around $465, Berkshire’s stock is at a 23.5X forward earnings multiple and roughly on par with the benchmark’s PE valuation. BRK.B also trades nicely beneath its decade-long high of 30.4X forward earnings and closer to the median of 21X.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Berkshire Hathaway’s stock currently lands a Zacks Rank #3 (Hold). After such a sharp YTD rally in BRK.B, there could be better buying opportunities ahead. However, long-term investors may still be rewarded which Warren Buffett has emphasized when it comes to owning Berkshire Hathaway shares.

Published in