Berkshire Hathaway Inc. (BRK.B) Down 25.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Berkshire Hathaway Inc. (BRK.B). Shares have lost about 25.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Berkshire Hathaway Inc. 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 Q4 Earnings Miss on Poor Segmental Results

Berkshire Hathaway delivered fourth-quarter 2019 earnings of $4.4 billion, down 22.7% year over year.

Operating earnings of $24 billion decreased 3.2% year over year.

The company witnessed soft performance at the Railroad, Utilities and Energy segment and higher expenses.

Behind the Headlines

Revenues increased 2.7% year over year to $254.6 billion.

Costs and expenses inched up 2.9% year over year to $225.7 billion.

Segment Results

Berkshire Hathaway’s Insurance and Other segment revenues increased 3.4% year over year to $211.1 billion on the back of higher insurance premiums earned, increase in sales and service revenues, leasing revenues and Interest, dividend and other investment income. This segment’s net earnings were $5.8 billion, down 4.3% year over year

Railroad, Utilities and Energy operating revenues declined 0.5% year over year to $43.4 billion due to lower revenues from freight rail transportation, energy operations and lower service revenues and other income. Net earnings of $8.3 billion were up 6.1% year over year.

Total revenues at Manufacturing, Service and Retailing rose 1.3% year over year to $142.7 billion. Net earnings grew 0.1% year over year to $9.4 billion.

Financial Position

As of Dec 31, 2019, consolidated shareholders’ equity was $424.8 billion, up 21.8% from the level as of Dec 31, 2018. At 2019 end, cash and cash equivalents were $64.2 billion, up 111% from the level at 2018 end.

The company exited 2019 with a float of about $129 billion, up $6 billion from the figure at year-end 2018.

Cash flow from operating activities totaled $38.7 billion in 2019, declining nearly 3.4% from 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Berkshire Hathaway Inc. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Berkshire Hathaway Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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