Yahoo Finance Should You Buy Berkshire Hathaway (BRK.B) Ahead of Q1 Earnings?
Berkshire Hathaway Inc. (BRK.B) is set to report first-quarter 2024 earnings soon. The Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at $3.41 per share and $81.03 billion, respectively. The top- and bottom-line estimates imply a year-over-year decline of 7.5% and 5.1%, respectively.
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chance of an earnings beat. At present, Berkshire Hathaway has an Earnings ESP of 0.00% and a Zacks Rank of 2. Hence, it is presumed that BRK.B is unlikely to beat estimates this earnings season.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Price Performance
Year to date, shares of Berkshire have gained 12.4% compared with the industry’s 13% growth, the Finance sector's 1.5% rise and the Zacks S&P 500 composite’s 7.6% increase.
Berkshire Hathaway Inc. Price and EPS Surprise
Berkshire Hathaway Inc. price-eps-surprise | Berkshire Hathaway Inc. Quote
Factors Acting in Favor
The insurance business in the to-be-reported quarter is likely to have benefited from improved pricing, higher average premiums per auto policy, increased exposure and favorable reserve development.
Per a report in Insurance Journal published by Marsh, global commercial insurance rates improved 1%, on average, in the first quarter of 2024.
Insurers, being beneficiaries of an improving rate environment, are likely to have witnessed improved investment results. A larger investment asset base, coupled with a higher reinvestment rate, is likely to have favored investment results in the to-be-reported quarter.
Continued insurance business growth is expected to have increased float.
The utilities and energy business is expected to have benefited from higher earnings from other energy businesses, including tax equity investments and Northern Powergrid businesses, as well as from the natural gas pipeline businesses.
Higher customer demand for products and services in many businesses is likely to have favored manufacturing, service and retailing businesses.
Headwinds
Berkshire is exposed to catastrophe losses, which weigh on underwriting results. Gallagher Re’s National Catastrophe and Climate Report estimates global insured losses from natural catastrophes to be $20 billion for the first quarter of 2024. Per Aon, first-quarter global insured catastrophe losses are estimated at nearly $17 billion, largely attributable to severe convective storm activity and winter weather in the United States. We estimate combined ratio to be 91.9% in the first quarter of 2024.
Nonetheless, rate increases, exposure growth, prudent underwriting and traditional risk management capabilities are likely to have favored underwriting results and combined ratio in the to-be-reported quarter.
The railroad business is likely to have suffered from a decrease in overall volume and a fall in average revenue per car per unit, primarily attributable to lower fuel surcharge revenues and higher non-fuel operating costs.
Bottom Line
Despite the headwinds, it is advisable to buy this stock over the long term, given its growing utilities and energy business, improved pricing, better investment results and flourishing manufacturing, service and retailing businesses.
Stocks to Consider
Here are three insurance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Horace Mann Educators Corporation HMN has an Earnings ESP of +15.03% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2024 earnings is pegged at 77 cents, indicating a year-over-year increase of 234.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
HMN’s earnings beat estimates in three of the last four reported quarters and matched in one.
Primerica, Inc. PRI has an Earnings ESP of +0.46% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2024 earnings is pegged at $4.11, indicating a year-over-year increase of 17.7%.
PRI’s earnings beat estimates in three of the last four reported quarters and missed in one.
Atlanticus Holdings Corporation ATLC has an Earnings ESP of +21.43% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2024 earnings is pegged at 98 cents, indicating a year-over-year decrease of 9.2%.
ATLC’s earnings beat estimates in three of the last four reported quarters and missed in one.
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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
Atlanticus Holdings Corporation (ATLC) : Free Stock Analysis Report
