Well-known holding group Berkshire Hathaway Inc. (NYSE: BRK.B) posted more substantial profits than analysts predicted, finishing 2023.
The company, led by legendary stock picker Warren Buffett, operates manufacturing, railroad, insurance and utility businesses.
Berkshire stayed sturdy last year while stock markets dropped and recession fears grew.
A Dive Into Berkshire’s Earnings
Specifically for the year’s final October-December quarter, Berkshire earned around $37 billion total. But that considerable number includes one-time changes tied to investments shifting value.
Buffett says to focus on core operations, excluding stocks.
There, Berkshire made another $8.5 billion just last quarter — higher than the $6.6 billion the company recorded during the same period a year ago.
The leading players producing those reliable billions were industrial firms, insurance providers, and railroad operators. Demand persists in utilizing Berkshire’s range of recession-resistant services and products.
Full-year 2023 earnings from operations neared $37 billion thanks to this diversification across sectors.
A key outcome was Berkshire spun off almost $30 billion extra cash flow even though lower stock markets limited gains.
Buffett put over $9 billion toward buying back Berkshire shares and made discounted business purchases while keeping cash to deploy into future opportunities. He anticipates the rocky period ahead could bring more attractively priced assets as cautious investors pull back.
Berkshire Hathaway’s Green Zone Power Rating
Berkshire Hathaway Inc. (NYSE: BRK.B) stock earns a 61 out of 100 on Adam O’Dell’s proprietary Green Zone Power Ratings system.
Berkshire Hathaway’s Green Zone Power Ratings in February 2024.
That means we are “Bullish” on the stock and expect it to outperform the broader market by 2X over the next 12 months.
Its “Bullish” overall rating is anchored by its 96 on Volatility.
Berkshire Hathaway stock has a beta of 0.8. Beta measures the volatility of a stock compared to its benchmark.
The S&P 500 carries a beta of 1. Anything below 1 indicates the stock is less volatile than the broader market.
BRK.B stock earns a 74 on Quality thanks to returns on assets, equity and investments, all greater than the insurance sector averages.
The company also has a net margin of 22%, compared to its industry peer average of just 7.3%.
Its Value rating of 67 is because its price-to-earnings ratio of 11.9 is lower than the industry average of 14.7. Berkshire’s price-to-cash flow ratio is more than half its peer average, making BRK.B a stronger value buy than others in its sector.
The stock does rate a 2 out of 100 on Size due to its $905 billion market cap.
Bottom line: The latest figures confirm Berkshire’s advantage of having dozens of individually stable subsidiaries averaging out risk.
Buoyed by past insurance profits, Mr. Buffett follows a long horizon, seizing only the best bargains through both good economies and bad.
The approach has rewarded loyal investors for decades.