Berkshire Hathaway’s After-tax look-Through Earnings $18 billion

Berkshire Hathaway's After-tax look-Through Earnings $18 billion

By my estimate, Berkshire Hathaway’s normal earning power after tax is approximately $18 billion. This puts the stock at an adjusted P/E ratio of 11x based on today’s share price.

To get there, I assume the following:

  • Redemption of GE, GS and Swiss Re preferred
  • Normalized but still low interest rates
  • Normalized dividend for Wells Fargo and U.S. Bancorp
  • 2012 dividend increase per consensus estimates
  • IBM full-year dividend
  • Full-year earnings for Lubrizol
  • A more normal housing environment

Following Buffett, I also include undistributed earnings from Berkshire’s large equity holdings.

No adjustment has been made for Berkshire’s large cash holdings which I expect will approximate $40 billion after Q1, 2012, assuming no major purchases. This equates to almost $25,000 per A share.

Here is my data.

Berkshire Hathaway's After-tax look-Through Earnings $18 billion

By Greg Speicher



About the Author

Greg Speicher
GregSpeicher.com was founded in 2009 by Greg Speicher. Greg is a private investor who has been investing, studying and writing about the the markets since 2006. Greg built several successful offline businesses including an Inc. 500 Company which he co-founded. Buffett stated, “I am a better investor because I am a businessman.” It is in that spirit that Greg brings his years of business experience to investing. ?? Greg received his B.A. in philosophy Magna Cum Laude from the University of St. Thomas in Rome, Italy, and attended the MBA Program at the Wharton School of the University of Pennsylvania. He also studied with Bruce Greenwald at the Value Investing Executive Education Course at Columbia University.