BRK.B Slips 2% in 3 Months, Trades at a Premium: How to Play the Stock

Shares of Berkshire Hathaway Inc. (BRK.B) have lost 2.1% in the past three months compared with the industry’s decline of 2.6%. In the meantime, the sector has risen 6.9% and the Zacks S&P 500 composite has gained 10.1%. 

Berkshire Hathaway is a conglomerate with more than 90 subsidiaries engaged in diverse business activities. This, in turn, provides it stability in various economic cycles.

BRK.B is now trending below its 50-day simple moving average (SMA), indicating the possibility of a downside ahead.

Berkshire Vs. Industry, Sector, S&P 500

Shares of BRK.B’s peers, Chubb Limited CB have lost 7.2% while those of The Progressive Corporation PGR have lost 11.8% in the past three months.

Chubb, a premier global provider of property and casualty insurance and reinsurance, is targeting growth in the middle-market segment across both domestic and international markets. Chubb is enhancing its core package solutions and expanding its specialty insurance portfolio. With focused strategic initiatives, Chubb seeks sustainable growth and stronger competitive positioning.

Progressive, one of the top auto insurers in the United States, is well-positioned to sustain profitability through its strong market presence, broad product offerings and disciplined underwriting. Progressive is advancing its strategy by promoting bundled auto insurance, limiting exposure to high-risk properties, and enhancing segmentation with targeted, innovative solutions. With this approach, Progressive continues to strengthen its competitive edge.

BRK.B Shares Are Expensive

The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 1.60, higher than the industry average of 1.54.  
 

Berkshire is relatively cheap compared to Progressive and Chubb.

Average Target Price for BRK.B Suggests Upside

Based on short-term price targets offered by four analysts, the Zacks average price target is $537.75 per share. The average suggests a potential 8.5% upside from the last closing price.

Factors to Note for BRK.B Stock

Berkshire Hathaway, though a diversified conglomerate, continues to rely on its insurance operations as the foundation of its business model, contributing about 25% of overall revenues and serving as a vital engine of long-term growth. With broad market reach, disciplined pricing, and reliable underwriting performance, the insurance segment remains resilient even in challenging market conditions.

That resilience is reinforced by Berkshire’s diversified portfolio, which helps stabilize results across economic cycles. Berkshire Hathaway Energy (BHE), the company’s regulated utility subsidiary, generates steady, predictable cash flows and maintains a strong focus on renewable energy, aligning Berkshire with the accelerating global move toward electrification and sustainability.

The Utilities and Energy division also includes Burlington Northern Santa Fe (BNSF), a strategically important but currently challenged business due to an unfavorable mix and reduced fuel surcharge revenues. However, rising demand for utility services should support improved performance over time.

Meanwhile, Berkshire’s Manufacturing, Service, and Retail businesses stand to benefit from a stronger economy, as higher consumer spending lifts revenues and enhances profitability.

A major portion of Berkshire’s capital is allocated to short-term U.S. Treasury bills and other government-backed instruments exceeding $100 billion or about 90%. This positioning has proved increasingly beneficial, as elevated interest rates in recent periods have boosted yields, despite the Federal Reserve implementing three rate cuts last year and anticipating two more in the near term. This conservative strategy serves a dual purpose — preserving capital and maintaining liquidity for strategic acquisitions or investments. 

A significant advantage for Berkshire is its growing insurance float—the funds held between collecting premiums and paying claims—which has expanded from about $114 billion in 2017 to $174 billion by the second quarter of 2025. This float provides Berkshire with low-cost capital that it invests in high-quality, durable assets such as Apple, Coca-Cola, BNSF and utility operations.

With its robust financial position, Berkshire also pursues disciplined share repurchases, reinforcing shareholder value and showcasing its strong capital management strategy.

Berkshire Hathaway’s Return on Capital

Return on equity (“ROE”) in the trailing 12 months was 7%, underperforming the industry average of 7.7%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds. It is noteworthy that, though BRK.B’s ROE lags the industry average, the metric has been improving consistently.
 

The same holds true for return on invested capital (ROIC), which has increased every year since 2020. This reflects BRK.B’s efficiency in utilizing funds to generate income. However, ROIC in the trailing 12 months was 5.6%, lower than the industry average of 5.9%.

Mixed Analyst Sentiment

The Zacks Consensus Estimate for 2025 earnings implies a 5.3% year-over-year decrease, while the same for 2026 suggests a 1.9% increase. The expected long-term earnings growth is pegged at 7%, in line with the industry average.

The consensus estimate for 2025 earnings has moved up 0.9% in the past seven days, while that for 2026 has moved down 1.5% in the same time.

Parting Thoughts on BRK.B Shares

Berkshire Hathaway brings dynamism to investors’ portfolios, delivering strong shareholder value for nearly sixty years under Warren Buffett’s guidance.

The focus is now shifting to how Berkshire will perform when Greg Abel assumes the role of CEO on Jan. 1, 2026, with Warren Buffett continuing as executive chairman.

Given Berkshire Hathaway’s elevated valuation, soft return on capital, projected near-term earnings pressure, and muted analyst sentiment, maintaining a cautious approach seems appropriate for this Zacks Rank #3 (Hold) stock.  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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