Analyst Note| Greggory Warren, CFA |
We expect to raise our fair value estimate for wide-moat-rated Berkshire Hathaway (in the neighborhood of 5%-10%) following a stronger conclusion to the company's fiscal year than we had been projecting. Fourth-quarter (full-year) revenue, which includes unrealized and realized gains/losses from Berkshire's investments and derivatives portfolios, increased 7.3% (declined 12.5%) year over year to $103.7 billion ($286.3 billion). Excluding the impact of investment and derivative gains/losses and other adjustments, fourth-quarter (full-year) operating revenue declined 1.3% (3.4%) to $64.4 billion ($245.4 billion). Operating earnings, exclusive of the impact of investment and derivative gains/losses but including goodwill and intangible asset impairments (including $9.8 billion attributable to Berkshire's 2016 acquisition of Precision Castparts), increased 13.6% (declined 8.6%) year over year to $5.0 billion ($21.9 billion) during the December quarter (full year). When including the impact of the investment and derivative gains/losses, net earnings increased 23.8% (fell 47.6%) to $35.8 billion ($42.5 billion).