Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is scheduled to release the results from its first fiscal quarter this evening. On average, analysts expect Warren Buffett’s massive firm to report earnings of $2,172.02 per Class A share and earnings of $1.45 per Class B share.
The Warren Buffett premium
Just this week, Barclays analysts increased their price target for Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) to $149 per share and rated it Overweight. But they’re not the only ones who have bullish expectations for Berkshire. In general, it appears like investors simply expect more out of the firm, mainly since Warren Buffett is in charge and his tremendous track record of success is well-known to all.
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Seeking Alpha contributor Josh Arnold notes that there seems to be a sort of “Warren Buffett” premium on Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) stock. He thinks the earnings estimates which are currently circulating are just too low to justify the share price of the firm’s Class B stock. In fact, he thinks the firm will need to beat current estimates for its earnings by almost 600 basis points a year in order to justify the share price of $129. He assigns a value of just $95 per share to the firm’s Class B shares.
Is now the time to buy Berkshire Hathaway?
Investors have come to expect great things out of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), and the firm is often used as a measuring stick for others. Few analysts cover the firm because it’s as if saying, “Warren Buffet, ’nuff said.”
But earlier this week, Barclays analyst Jay Gelb actually said he thinks it’s time to buy Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) shares. He says the stock is “attractively valued” at 1.41 times book value. That’s a little ahead of the level at which Berkshire Hathaway will buy back stock, which is 1.2 times book value. He also notes that the firm still has plenty of cash on hand, around $25 billion, potentially, so that it can keep gobbling up companies.