Skip to Content
Stock Analyst Update

Berkshire's Results As Expected

We are leaving our fair value estimate in place for the wide-moat firm.

Mentioned: ,

With wide-moat Berkshire Hathaway's (BRK.A)/(BRK.B) fourth-quarter and full-year operating results being more or less in line with our expectations, we are leaving our $380,000 ($253) per Class A (B) share fair value estimate in place. With the company lapping a difficult fourth quarter on the investment side of things, fourth-quarter (full-year) revenue, which includes unrealized and realized gains/losses from Berkshire's investments and derivatives portfolios, increased 243.7% (45.2%) to $96.9 ($327.2) billion. Excluding the impact of investment and derivative gains/losses and other adjustments, fourth-quarter (full-year) operating revenue increased 3.0% (2.7%) to $65.6 ($254.6) billion. Meanwhile, net operating earnings, excluding the impact of investment and derivative gains/losses, declined 22.7% (3.3%) year over year to $4.4 ($24.0) billion during the fourth quarter (full year), as expenses rose faster than revenue (especially in the back half of the year). When including the impact of the investment and derivative gains/losses, Berkshire's net earnings increased dramatically, having lapped poor investment results during the fourth quarter of 2018, with the company reporting $29.2 ($81.4) billion in fourth-quarter (full-year) net earnings compared with negative $25.4 (positive $4.0) billion in the prior year's period(s). Book value per share, which still serves as a decent proxy for measuring changes in Berkshire's intrinsic value, increased 7.2% sequentially to $260,906 (from $243,483 at the end of the September quarter), better than our forecast of $252,614. The company closed out 2019 with a record $128.0 billion in cash and cash equivalents, down slightly from $128.2 billion at the end of the third quarter of 2019 (but up from $111.9 billion at the end of 2018). This left Berkshire, by our estimates, with around $104 billion in dry powder at the start of 2020 that could be committed to investments, acquisitions, share repurchases, and dividends.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.