BRK.B Stock Trading Near 52-Week High: Should You Buy Now or Wait?

Shares of Berkshire Hathaway Inc. (BRK.B) closed at $530.96 on Friday, near its 52-week high of $539.00, after having gained 17.2% year to date. Shares outperformed the industry, the Finance sector, as well as the Zacks S&P 500 composite index in the same time frame.

With a market capitalization of more than $1.1 trillion, this insurance behemoth beat estimates in three of the last four quarters, while missing in one. BRK.B’s property and casualty insurance business, one of the largest property and casualty insurance companies, generates the maximum return on equity.

Berkshire Hathaway Outperforms Industry, Sector & S&P YTD

Shares of Chubb Limited CB and The Progressive Corporation PGR have gained 1% and 10.6% year to date, respectively.

Chubb is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. In its efforts to accelerate growth, Chubb is also making strategic investments in various initiatives.

Progressive, one of the country’s largest auto insurance groups, is set to deliver steady profitability, given its solid market presence, a convincing portfolio of products and services, and underwriting and operational expertise. Progressive has intensified its focus on prioritizing auto bundles, lowering exposure to risky properties and increasing segmentation through product rollouts.

BRK.B Trades Above 50-Day Moving Average

Berkshire Hathaway shares are trading well above the 50-day moving average, indicating a bullish trend. 

Berkshire Hathaway’s Price Movement Vs 50-Day Moving Average

BRK.B Shares Are Trading At a Premium 

The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 1.76, higher than the industry average of 1.63.  

While Berkshire is relatively cheap compared to Progressive, it is expensive when compared with Chubb.

Average Target Price for BRK.B Suggests Downside

Based on short-term price targets offered by four analysts, the Zacks average price target is $521.00 per share. The average suggests a potential 2% downside from the last closing price.

What’s Working in Favor of Berkshire Hathaway?

The insurance business, accounting for about one-fourth of BRK.B’s top line, is poised for long-term growth, banking on increased exposure, prudent underwriting standards and better pricing.

Continued insurance business growth fuels an increase in float, drives earnings and generates maximum return on equity.

Utilities and Energy (its other two largest businesses outside of insurance) as well as Manufacturing, Service and Retail are economically sensitive. Increased revenue contributions from Burlington Northern Santa Fe Corp. favored the Utilities and Energy business. However, unfavorable changes in the business mix and lower fuel surcharge revenues are areas of concern. Demand for utilities is expected to be strong in the future and drive earnings growth.

Increasing demand for goods and services, given an improved economic backdrop, should benefit its Manufacturing, Service and Retail operations.

Collectively, these have driven revenues and facilitated margin expansion over the past many years.

With a huge cash hoard, Berkshire Hathaway acquires entities or adds stakes in companies that have consistent earning power and generate impressive returns on equity. While big acquisitions open up more business opportunities, bolt-on acquisitions enhance the earnings of the existing business.   

BRK.B has strengthened its balance sheet with more than $100 billion in cash reserves, low debt and a high credit rating.

Berkshire Hathaway's liquidity helps it repurchase shares regularly, which is an effective capital deployment to distribute wealth to shareholders. 

Berkshire Hathaway’s Return on Capital

Return on equity in the trailing 12 months was 7.7%, underperforming the industry average of 8.3%. 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 is lagging the industry average, the company has been continuously generating improved ROE.
 

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 6.1%, lower than the industry average of 6.4%.

Mixed Analyst Sentiment

The Zacks Consensus Estimate for 2025 implies an 8.5% year-over-year decrease, while the same for 2025 suggests a 7.8% increase.

The consensus estimate for 2025 and 2026 earnings has moved 0.6% and 1.2% south, respectively, in the past 30 days.

Parting Thoughts on BRK.B Shares

Berkshire Hathaway is a conglomerate with more than 90 subsidiaries engaged in diverse business activities. Thus, holding shares of Berkshire Hathaway renders dynamism to shareholders’ portfolios. Furthermore, BRK.B is guided by Warren Buffett, whose unparalleled expertise has delivered significant value to shareholders for almost six decades.

Yet, its unfavorable return on capital and muted analyst sentiments keep us cautious.

As Berkshire Hathaway trades at a premium, existing shareholders should hold their position in this Zacks Rank #3 (Hold) stock, while prospective investors should wait for a more attractive valuation before entering.

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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