Can Berkshire's Share Buyback Policy Boost its Bottom Line?

Berkshire Hathaway Inc. (BRK.B) has made share repurchases a more prominent part of its capital allocation strategy in recent years. While Warren Buffett and Charlie Munger historically prioritized acquisitions and reinvestment, the company revised its approach in 2018. Under the new policy, buybacks are permitted when shares trade below their intrinsic value and Berkshire retains at least $30 billion in cash and equivalents. This relatively flexible framework has allowed the company to pursue repurchases more actively, especially when attractive investment opportunities are limited.

Backed by strong cash generation and given a lack of compelling acquisition targets, Berkshire has increasingly turned to buybacks as a method to return capital to shareholders. In 2024, the company repurchased $2.9 billion worth of stock. Buybacks reduce the number of shares outstanding, thereby lifting earnings per share (EPS) and return on equity (ROE), even if total net income remains steady. This financial boost enhances valuation metrics and investor appeal.

Beyond the numbers, the repurchase activity reflects management’s conviction in the company’s intrinsic worth. It sends a clear message that Buffett views the stock as undervalued, reinforcing shareholder confidence. In the absence of major deals, buybacks provide a measured and accretive use of capital.

Berkshire’s repurchase strategy has become a vital lever in driving shareholder value. By supporting EPS growth and signaling confidence in the stock’s long-term potential, buybacks offer an effective response to limited reinvestment options and will likely remain central to the company’s financial strategy.

What About BRK.B’s Competitors?

Travelers Companies’ TRV solid cash generation has allowed it to return capital to shareholders via share buybacks. Travelers returned more than $1.4 billion of excess capital to shareholders, including $0.9 billion in share repurchases, in the first half of 2025. million. As of June 30, 2025, Travelers had $4.29 billion of capacity remaining under its share repurchase authorization approved by the board.

Chubb Limited’s CB flexible repurchase approach reflects strong capital discipline, supports valuation and signals management’s confidence in Chubb’s long-term profitability and financial strength. Chubb presently has a $5 billion buyback program under its authorization.

BRK.B’s Price Performance

Shares of BRK.B have gained 5% year to date, outperforming the industry.

BRK.B’s Expensive Valuation

BRK.B trades at a price-to-book value ratio of 1.56, above the industry average of 1.52. It carries a Value Score of D.

No Estimate Movement for BRK.B

The Zacks Consensus Estimate for BRK.B’s second-quarter and third-quarter 2025 EPS witnessed no movement over the past 30 days. The consensus estimate for full-year 2025 and 2026 EPS also witnessed no movement over the past 30 days.
 

The consensus estimates for BRK.B’s 2025 and 2026 revenues indicate year-over-year increases. While the consensus estimate for BRK.B’s 2025 EPS indicates a decline, the same for 2026 suggests an increase.  

BRK.B stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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