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Berkshire Hathaway Inc. (BRK.B), headquartered in Omaha, Nebraska, is a holding company that owns subsidiaries in a variety of business sectors like insurance, freight, rail, transportation, and utility. With a market cap of $1.1 trillion, Berkshire's other operations include a railway company, a specialty chemical company, and an international association of diversified businesses.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and BRK.B definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the insurance-diversified industry. BRK.B diversified business model, spanning multiple sectors, reduces market risk and generates diversified revenue streams. Key contributors, including GEICO and Berkshire Hathaway Reinsurance Group, provide significant investment capital, while strategic acquisitions, such as BNSF railroad and Berkshire Hathaway Energy, demonstrate a long-term focus on stable assets.
Despite its notable strength, Berkshire slipped marginally from its 52-week high of $507, achieved on Feb. 25. Over the past three months, BRK.B stock gained 4%, outperforming the S&P 500 Index’s ($SPX) 2.3% dip during the same time frame.
In the longer term, shares of Berkshire rose 10.8% on a YTD basis and climbed 22.9% over the past 52 weeks, outperforming SPX’s YTD marginal losses and 15.4% returns over the last year.
To confirm the bullish trend, Berkshire is trading above its 50-day moving average since mid-January, with slight fluctuations. It has been trading above its 200-day moving average over the past year.
BRK.B's strong performance is due to strong top and bottom lines, driven by improved results in its insurance, Berkshire Hathaway energy, and non-controlled businesses. Increased investment income and a focus on prudent underwriting standards in the insurance business have also contributed to growth. With a strong cash position, the company is expected to continue its acquisition spree, expanding its portfolio of entities with consistent earnings power. The insurer has also started increasing its investment in Japan. Overall, BRK.B is well-positioned for continued success.
On Feb. 22, BRK.B reported its Q4 results, and its shares closed up more than 4% in the following trading session. Its operating earnings stood at $14.5 billion, up 71.3% year over year. The company’s EPS declined 47.4% year over year to $9.13.
In the competitive arena of finance, JPMorgan Chase & Co. (JPM) has taken the lead over Berkshire, showing resilience with a 41.2% uptick over the past 52 weeks. However, JPM lagged behind the stock with an 8.1% gain on a YTD basis.
Wall Street analysts are moderately bullish on BRK.B’s prospects. The stock has a consensus “Moderate Buy” rating from the six analysts covering it, and the mean price target of $503 suggests a potential marginal upside from current price levels.
