Berkshire Hathaway's Net Margin Fluctuates: Can it Stabilize?

Berkshire Hathaway BRK.B, a conglomerate with more than 90 subsidiaries, is engaged in diverse business activities having exposure to capital-intensive as well as economically sensitive sectors. While this provides stability in various economic cycles, it also induces fluctuations in net margin. Berkshire Hathaway's profitability is shaped by underwriting prudence, performance of its investment portfolio, as well as performance of its energy, manufacturing, service and retail divisions.

Berkshire Hathaway’s business model is anchored by its insurance operations, which contribute roughly a quarter of total revenues and generate the maximum return on equity. While Berkshire Hathaway’s property and casualty insurers — GEICO, Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group — often generate underwriting profits, catastrophe losses, reserve adjustments and pricing cycles can swing insurance profitability from year to year. In addition, accounting rules (notably unrealized investment gains flowing through net income) amplify reported net-margin volatility.

Being an insurer, Berkshire Hathaway is sensitive to changes in the interest rate environment that impact investment income. However, BRK.B earns substantial income from a well-balanced portfolio comprising fixed income securities, cash equivalents and high-quality public equities.

Margin volatility also arises from Berkshire’s railroad, utilities and manufacturing, retail as well as service segments that are influenced by economic cycles, commodity costs, and regulatory factors, resulting in uneven annual profit contributions. 

Long-term margin stability depends on scaling predictable, high-quality businesses, such as regulated utilities and energy infrastructure, maintaining disciplined underwriting with adequate pricing, and reducing exposure to catastrophe-prone risks to support resilient, durable profitability across cycles.

What About BRK.B’s Peers?

Chubb Limited CB and Progressive Corporation PGR have delivered strong net margin improvement, supported by disciplined underwriting and effective pricing. 

Chubb benefited from solid commercial lines expansion, reduced catastrophe losses and sustained rate adequacy, leading to a 440-basis-point margin increase over two years. 

Progressive boosted profitability through advanced risk selection, policy growth and tighter expense management, with recent auto rate hikes contributing to a 980-basis-point margin rise.

Chubb and Progressive show how underwriting discipline, operational efficiency and responsive pricing strategies can drive consistent net margin gains across insurance cycles.

BRK.B’s Price Performance

Shares of BRK.B have gained 11.3% year to date, outperforming the industry.

BRK.B’s Expensive Valuation

BRK.B trades at a price-to-book value ratio of 1.55, above the industry average of 1.48. It carries a Value Score of D.

Estimate Movement for BRK.B

The Zacks Consensus Estimate for BRK.B’s fourth-quarter 2025 EPS has moved 15.8% south over the past seven days, while that for first-quarter 2026 EPS has witnessed no movement in the same period. The consensus estimate for full-year 2025 and 2026 EPS has moved 0.3% and 3% south, respectively, over the past seven days.
 

The consensus estimate for BRK.B’s 2025 and 2026 revenues indicates year-over-year increases. While the consensus estimate for BRK.B’s 2025 and 2026 EPS indicates a year-over-year decline. 
 
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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