Can Berkshire Hathaway's Railroad Subsidiary Power its Growth?

Burlington Northern Santa Fe, LLC (“BNSF”), Berkshire Hathaway Inc.’s (BRK.B) flagship railroad subsidiary, is an important pillar of the conglomerate’s widely diversified portfolio. It operates one of the largest railroad systems in North America, providing stable, inflation-protected cash flows and a competitive advantage in the North American freight rail industry. Berkshire Hathaway acquired BNSF in 2010 and has consistently contributed robust earnings, reflecting the essential nature of rail transport in the U.S. economy. 

Serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern regions and certain ports of the United States, BNSF Railway transports a range of products and commodities derived from manufacturing, agricultural and natural resource industries. This exposure supports revenue diversification and aligns BNSF’s performance with broader economic trends. With its scale and pricing power, the railroad consistently delivers strong free cash flow, giving Berkshire Hathaway the flexibility to reinvest or preserve capital for future acquisitions. 

After-tax earnings of BNSF increased 6.2% in the first quarter of 2025 compared to 2024 from higher volumes and overall improved operating efficiencies, despite the negative impacts of severe weather in February 2025. BNSF’s regulated infrastructure-like earnings support the conglomerate’s financial resilience. 
BNSF, thus, is not just a transportation business but a long-term compounding engine for Berkshire Hathaway. Its strategic importance lies in its ability to deliver consistent earnings and support Berkshire Hathaway’s capital allocation strategy, making it a vital pillar of a value creation model.

What About Competitors?

Headquartered in Omaha, NE, Union Pacific Corporation UNP, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. Relatively stable e-commerce demand and cost-cutting efforts continue to boost the bottom line.

Headquartered in Atlanta, GA, Norfolk Southern Corporation NSC engages in the rail transportation of raw materials, intermediate products and finished goods in the United States. E-commerce demand is supporting Norfolk Southern's shipment volumes. The company utilizes the Precision Scheduled Railroading operating plan to reduce costs and enhance services for optimal asset utilization

BRK.B’s Price Performance

Shares of BRK.B have gained 7.2% year to date, outperforming the industry.

BRK.B’s Expensive Valuation

BRK.B trades at a price-to-book value ratio of 1.60, above the industry average of 1.57. But it carries a Value Score of D.

No Estimates 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 also witnessed no movement over the past 30 days.

The consensus estimates for BRK.B’s 2025 and 2026 revenues indicate a year-over-year increase. 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research