Intrinsic Value Berkshire Hathaway Inc. (BRYN.DE)

• Previous Close: €402.45
• Intrinsic Value: €247.98
• Upside potential: -38%

Stock Valuation Context

Business Model And Market Position

Berkshire Hathaway Inc. operates as a diversified conglomerate with a strong presence in insurance, freight rail transportation, and utilities. Its insurance segment, including property, casualty, and reinsurance, forms the core revenue driver, complemented by its ownership of BNSF Railway, a critical North American freight rail operator. The company’s utility business, through Berkshire Hathaway Energy, spans electricity generation, transmission, and distribution, leveraging a mix of renewable and conventional energy sources. Beyond these core segments, Berkshire Hathaway owns a vast portfolio of manufacturing, retail, and service subsidiaries, ranging from confectionery and aerospace components to home construction and aviation training. This diversified model provides resilience against sector-specific downturns while capitalizing on long-term growth trends in infrastructure and consumer demand. The company’s market position is reinforced by its disciplined capital allocation, strong brand equity, and the leadership of Warren Buffett, whose value-oriented investment philosophy continues to attract investor confidence. Its subsidiaries often dominate niche markets, such as See’s Candies in premium chocolates or Clayton Homes in manufactured housing, further solidifying its competitive moat.

Revenue Profitability And Efficiency

Berkshire Hathaway reported revenue of EUR 424.2 billion for FY 2024, underpinned by its diversified operations. Net income stood at EUR 89.0 billion, reflecting robust profitability across its insurance, rail, and energy segments. The company’s operating cash flow of EUR 30.6 billion highlights its ability to generate liquidity, while capital expenditures of EUR -18.9 billion indicate disciplined reinvestment in core infrastructure and growth initiatives.

Earnings Power And Capital Efficiency

With diluted EPS of EUR 41.27, Berkshire Hathaway demonstrates strong earnings power, driven by its high-margin insurance underwriting and investment income. The company’s capital efficiency is evident in its ability to deploy cash into high-return acquisitions and organic projects, though its zero dividend policy reflects a preference for reinvestment over shareholder payouts.

Balance Sheet And Financial Health

Berkshire Hathaway maintains a solid balance sheet, with EUR 47.7 billion in cash and equivalents providing ample liquidity. Total debt of EUR 124.8 billion is manageable relative to its market cap of EUR 961.9 billion and diversified cash flows. The company’s conservative leverage and strong credit profile ensure financial flexibility for strategic acquisitions and operational needs.

Growth Trends And Dividend Policy

Growth is driven by organic expansion in utilities and rail, supplemented by strategic acquisitions. The company’s dividend policy remains unchanged, with no dividends paid, as excess cash is reinvested or used for share buybacks. This aligns with its long-term focus on compounding value through retained earnings and capital appreciation.

Valuation And Market Expectations

At a market cap of EUR 961.9 billion, Berkshire Hathaway trades at a premium, reflecting its diversified earnings streams and leadership in stable industries. Investors value its low-beta (0.87) profile and consistent performance, though expectations are tempered by the challenges of scaling such a large conglomerate.

Strategic Advantages And Outlook

Berkshire Hathaway’s strategic advantages include its decentralized operating model, strong subsidiary brands, and unmatched access to low-cost capital. The outlook remains positive, with opportunities in renewable energy, infrastructure modernization, and selective M&A. However, macroeconomic risks and succession planning post-Buffett are key monitorables.

Sources

10-K filings, investor presentations, Bloomberg