Berkshire Hathaway’s stock has fallen 8% in the past three months. This underperforms the industry, the finance sector, and the S&P 500 composite. The stock is currently trading below its 50-day simple moving average, which could indicate further downside.
Other major insurance companies like Chubb Limited and The Progressive Corporation have also struggled recently. Chubb is trying to grow by strengthening its core offerings and expanding specialty products. Progressive is focusing on bundled auto products and improving segmentation.
Berkshire Hathaway’s stock is overvalued compared to its industry peers. It trades at a price-to-book multiple of 1.59, higher than the industry average of 1.55. However, some analysts see potential upside.
The Zacks average price target for BRK.B is $537.75 per share, suggesting a possible 10.6% gain. Berkshire Hathaway’s insurance operations make up about one-quarter of its total revenues. This segment has disciplined pricing and strong underwriting performance.
It is well-positioned to handle adverse market conditions. The company’s diversified structure adds resilience. Berkshire Hathaway Energy is focusing more on renewable energy, which ensures stable cash flows.
Berkshire’s recent stock performance
Burlington Northern Santa Fe faces some challenges but should benefit from rising demand for utility services. Berkshire’s Manufacturing, Service, and Retail divisions are poised to gain from an improving economy.
This could lead to revenue and margin growth. The company’s insurance float has grown significantly. It serves as a low-cost source of capital for strategic investments, including stakes in Apple and Coca-Cola.
Despite its strengths, Berkshire’s financial metrics show some room for improvement. Its trailing 12-month return on equity was 7.2%, lower than the industry average of 7.8%. Its return on invested capital has improved since 2020 but remains below the industry average at 5.7%.
Analysts have mixed feelings about Berkshire’s near-term performance. The Zacks Consensus Estimate suggests a 6.7% year-over-year decrease in earnings for 2025, but a 5% increase for 2026. The expected long-term earnings growth is 7%, slightly above the industry average.
Berkshire Hathaway has more than 90 subsidiaries involved in diverse business activities. It has delivered significant value to shareholders for nearly six decades under Warren Buffett. With Greg Abel set to succeed Buffett as CEO in 2026, and Buffett continuing as executive chairman, the company’s future performance remains closely watched.
Given the premium valuation, subpar returns on capital, and mixed analyst sentiments, it may be prudent to wait and see with this Zacks Rank #3 (Hold) stock.
