Should You Add BRK.B Stock to Your Portfolio Ahead of Q1 Earnings?

Berkshire Hathaway (BRK.B) is expected to witness an improvement in its top line but a decline in its bottom line when it reports first-quarter 2025 results.

The Zacks Consensus Estimate for BRK.B’s first-quarter revenues is pegged at $92.2 billion, indicating a 2.6% increase from the year-ago reported figure.

The consensus estimate for earnings is pegged at $4.81 per share. The Zacks Consensus Estimate for BRK.B’s first-quarter earnings witnessed no movement in the past 30 days. The estimate suggests a year-over-year decrease of 7.3%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

BRK.B’s Decent Earnings Surprise History

Berkshire Hathway’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and missed in one, the average surprise being 28.20%. This is depicted in the following chart.
 

What the Zacks Model Unveils for Berkshire Hathaway

Our proven model does not conclusively predict an earnings beat for Berkshire this time around. This is because a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the chances of an earnings beat. This is not the case, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: BRK.B has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.43.

Berkshire Hathaway Inc. Price and EPS Surprise

Berkshire Hathaway Inc. price-eps-surprise | Berkshire Hathaway Inc. Quote

Zacks Rank: BRK.B currently has a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Shape BRK.B’s Q1 Results

Berkshire Hathaway’s insurance operations are likely to have benefited from better pricing, solid retention rates, increased average premiums per auto policy, broader market exposure, and positive reserve developments. Continued expansion in the insurance segment is also expected to have driven growth in the company’s float.

GEICO, its private passenger automobile insurance business, is likely to have benefited from  higher average premiums per auto policy as well as lower claims frequencies, coupled with improved operating efficiencies.

Investment results are likely to benefit from higher yields and a larger investment asset base.

The railroad business is likely to have witnessed an unfavorable business mix and lower fuel surcharge revenues. Earnings of BNSF, its railway business, are expected to have benefited from higher unit volume, improvements in employee productivity and lower other operating costs.

The utilities and energy business is expected to have benefited from higher earnings from natural gas pipelines and other energy businesses.

Manufacturing, service and retailing businesses are likely to have benefited from higher customer demand for products and services in many businesses.

Share buybacks are likely to have supported the bottom line. 

BRK.B’s Price Performance & Valuation

The stock outperformed the industry, sector and the S&P 500 in the first quarter of 2025.

The stock is trading at a price-to-book value of 1.5X, slightly higher than the industry’s 1.43X.

Image Source: Zacks Investment Research

It is attractively valued compared with other insurers like The Progressive Corporation PGR and The Allstate Corporation ALL.

Investment Thesis

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. Yet, its insurance business, generating the maximum return on equity, is exposed to catastrophe losses, which induce volatility in underwriting profits.

Nonetheless, Berkshire continues to deliver substantial value to shareholders, driven by its leading market presence, broad spectrum of business activities, and, above all, Warren Buffett’s guidance.

What Should Investors Do Now With BRK.B Stock?

Berkshire’s insurance business should benefit from solid results at GEICO as well as higher interest income from short-term investments. Notably, insurance operations contribute around one-fourth of Berkshire’s top line.

However, an unfavorable return on capital, a likely decline in the fourth-quarter bottom line, lowered times interest earned, and contracting margins keep us cautious. Also, given its premium valuation, investors should adopt a wait-and-see approach for BRK.B stock.

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

Zacks Investment Research