Berkshire Hathaway (BRK.A): Exploring Valuation as Shares Hover Near All-Time Highs

Berkshire Hathaway (BRK.A) shares have moved only slightly this week, with the stock gaining about 0.4% in the past seven days. Investors are watching for shifts in performance after a mildly positive month in what has been a generally strong year.

See our latest analysis for Berkshire Hathaway.

Berkshire Hathaway’s share price has steadily built on earlier gains, helping total shareholder return reach over 8% in the past year and a striking 63% over three years. Last quarter’s market action suggests momentum is holding up as investors stay optimistic about the company’s ability to navigate change.

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With Berkshire Hathaway’s shares hovering near all-time highs, investors are now weighing whether the company remains undervalued or if the strong track record means markets have already priced in future growth. The question remains: is there still a buying opportunity?

Price-to-Earnings of 16.9x: Is it justified?

Berkshire Hathaway is currently trading at a price-to-earnings (P/E) ratio of 16.9x, slightly above the average for the US Diversified Financials industry. With shares at $738,500, the market appears willing to pay a modest premium for Berkshire’s earnings relative to sector peers.

The price-to-earnings ratio reflects how much investors are prepared to pay for each dollar of earnings. For a company like Berkshire, which operates across an exceptionally diverse portfolio of businesses, the P/E is a simple but powerful signal of market sentiment about profit sustainability and quality.

Though Berkshire’s ratio is higher than the industry average of 16.5x, it is well below the peer group average of 26x and notably below its estimated fair price-to-earnings ratio of 19.8x. This suggests the market is pricing Berkshire more conservatively than other major players, but with some premium attached for its substantial scale and reputation. The fair ratio marks a level the stock could reach if optimism rises or results improve.

Explore the SWS fair ratio for Berkshire Hathaway

Result: Price-to-Earnings of 16.9x (ABOUT RIGHT)

However, slower annual net income growth and Berkshire’s premium valuation could shift sentiment if earnings disappoint or if market conditions weaken unexpectedly.

Find out about the key risks to this Berkshire Hathaway narrative.

Another View: Discounted Cash Flow Tells a Different Story

Looking past earnings multiples, the SWS DCF model calculates Berkshire Hathaway’s fair value at $1,078,137 per share. This figure is well above its current market price of $738,500. On this basis, the stock appears deeply undervalued and could offer significant upside. Is the market too cautious, or does DCF miss some risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Berkshire Hathaway for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own Berkshire Hathaway Narrative

If you see things differently or want to dig deeper, you can analyze the numbers and shape your own investment narrative in just a few minutes: Do it your way

A great starting point for your Berkshire Hathaway research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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