Insights

• Berkshire Hathaway maintains a strong liquidity position, supported by high cash reserves and a current ratio well above the industry average, providing financial flexibility.
• The company's profitability is highly volatile due to investment gains and losses, making it difficult to assess sustainable earnings, and the net profit margin is below the industry average.
• The company's capital structure is conservative, with a lower debt-to-equity ratio compared to the industry average, indicating lower financial leverage.
• Revenue growth has been moderate but consistent, driven by the company's diversified business segments, but recent trends indicate deceleration.
• The company faces risks related to catastrophic events, market volatility, and regulatory changes, which could impact its financial performance.

Analysis

• Revenue - Revenue growth has been moderate but consistent, driven by the company's diversified business segments. - Sales/Revenue is trending downward, and the YoY growth is lower than its 5-year CAGR, indicating recent deceleration. - The most recent enterprise value to sales is greater than the industry average.
  • Profitability
    • Profitability has been highly volatile due to investment gains and losses, making it difficult to assess the company's true earnings power.
    • The most recent net profit margin is below the industry average, and the trend has been strongly decreasing, suggesting declining profitability.
    • The most recent return on average assets and return on average total equity are significantly higher than the industry average, indicating efficient asset utilization and strong returns for shareholders.
  • Liquidity
    • The company maintains a strong liquidity position, supported by high cash reserves and a current ratio well above the industry average.
    • The current ratio and quick ratio are significantly higher than the industry average, indicating strong liquidity and the ability to meet short-term obligations.
    • The current ratio has been moderately decreasing.
  • Solvency
    • The company's long-term solvency appears stable, with moderate leverage and increasing equity.
    • The total debt to total equity ratio is significantly lower than the industry average, indicating lower financial leverage and a more conservative capital structure.
    • The total debt to total equity ratio has been moderately increasing.
  • Operational Efficiency
    • The company efficiently manages its inventory, as indicated by stable inventory levels.
    • The most recent enterprise value to EBITDA is greater than the industry average.
  • Cash Flow Analysis - Net operating cash flow has been inconsistent, reflecting the impact of investment gains/losses and insurance underwriting results. - Capital expenditures have been relatively stable, indicating ongoing investments in infrastructure and equipment. - Purchase/sale of investments has been a significant driver of cash flow, reflecting the company's investment strategy.
  • Risk Factors
    • Exposure to catastrophic events like natural disasters, pandemics, and cyber-attacks that could cause significant insured losses.
    • Volatility in equity markets and interest rates that could impact investment portfolio and insurance operations.
    • Regulatory changes that could adversely impact operations across various business segments.
  • Future Outlook
    • Future balance sheet composition is expected to remain strong, with continued growth in equity and stable debt levels.
    • The company's financial flexibility should allow it to pursue strategic acquisitions and investments.
    • Key metrics to monitor include cash levels, debt-to-equity ratio, and changes in long-term investments.

Benchmarks (as of 2025-05-22)

• Performance Comparison:

  • Berkshire Hathaway has shown mixed performance compared to the Financial Select Sector SPDR Fund. Year-to-date, Berkshire Hathaway outperformed XLF by 7.06%, with returns of 11.63% versus 4.57%. Over a 1-year period, BRK/B outperformed XLF by 1.0%, achieving returns of 23.6% compared to 22.6% for XLF. However, over a 2-year period, Berkshire Hathaway underperformed XLF by -5.69%, with returns of 57.27% compared to 62.96% for XLF. Over a 3-year period, BRK/B outperformed XLF by 6.46%, with returns of 62.88% compared to 56.42% for XLF.
  • The consistency of Berkshire Hathaway's performance relative to XLF varies across different time frames, indicating periods of both outperformance and underperformance.

• Risk and Return Analysis:

  • The annualized returns show that Berkshire Hathaway has provided competitive returns, with a 1-year annualized return of 23.6% compared to 22.6% for XLF, outperforming by 1.0%. However, over 2 years, BRK/B underperformed XLF, with annualized returns of 25.41% compared to 27.66%, underperforming by -2.25%. Over 3 years, BRK/B outperformed XLF, with annualized returns of 17.66% compared to 16.08%, outperforming by 1.58%.
  • Berkshire Hathaway generally exhibits lower annualized volatility compared to the Financial Select Sector SPDR Fund. For example, in Q2 2022, BRK/B ranged from 20.71% to 27.82%, while XLF ranged from 27.70% to 30.12%.
  • The maximum drawdown for Berkshire Hathaway was -26.58% on 2022-10-12, while for the Financial Select Sector SPDR Fund, it was -25.81% on 2022-10-12. This suggests that BRK/B experienced a slightly larger peak-to-trough decline than XLF during the observed period, indicating a similar risk profile.

• Risk-Adjusted Performance:

  • The Sharpe ratios for Berkshire Hathaway generally show higher levels compared to the Financial Select Sector SPDR Fund, indicating better risk-adjusted returns. As of Q2 2025, the Sharpe ratio for Berkshire Hathaway is between 1.09 and 1.68, while for the Financial Select Sector SPDR Fund, it is between 1.07 and 1.21.
  • The beta values for Berkshire Hathaway are consistently below 1, indicating that it is less volatile than the market. As of Q2 2025, the beta for Berkshire Hathaway is between 0.54 and 0.56, while for the Financial Select Sector SPDR Fund, it is between 0.79 and 0.81. This suggests that BRK/B has lower sensitivity to market movements compared to XLF.

• Overall Assessment:

  • Berkshire Hathaway presents a compelling profile with competitive returns and lower volatility compared to the Financial Select Sector SPDR Fund. The higher Sharpe ratios suggest better risk-adjusted performance for BRK/B. The lower beta values indicate that Berkshire Hathaway is less sensitive to market movements, making it a potentially more stable investment option.
  • Recent trends show that BRK/B has maintained its lower sensitivity to market movements and has demonstrated better risk-adjusted returns compared to XLF.

Peers Price History(as of 2025-05-22)

• Performance Comparison:

  • Berkshire Hathaway (BRK/B) has generally underperformed Progressive Corp. (PGR) over the past three years. For example, over the last three years, BRK/B has returned 62.88% compared to PGR's 148.99%. In the shorter term, such as Year-To-Date, BRK/B's performance of 11.63% also lags behind PGR's 17.41%. However, in the past week, BRK/B outperformed PGR with returns of -1.72% compared to -3.86%.

• Risk and Return Analysis:

  • The annualized returns show that BRK/B has provided lower returns compared to PGR over 1, 2, and 3-year periods. For instance, the 3-year annualized return for BRK/B is 17.66%, while PGR's is 35.54%.
  • BRK/B has generally exhibited lower annualized volatility compared to PGR and ALL. As of Q2 2025, BRK/B's volatility ranged from 23.45% to 35.58%, while PGR's ranged from 24.74% to 41.56%, and ALL's ranged from 21.94% to 39.73%. This indicates that BRK/B has been relatively more stable.
  • The maximum drawdown for BRK/B was -26.58% on 2022-10-12, which is less severe than the maximum drawdown for The Allstate Corp. (ALL) of -27.35% on 2023-07-14, but more moderate than the maximum drawdown of Progressive Corp. (PGR) of -22.91% on 2023-07-13. This suggests that BRK/B has a moderate risk profile in terms of potential losses from peak values.

• Risk-Adjusted Performance:

  • Progressive Corp. (PGR) generally exhibited higher Sharpe Ratios compared to Berkshire Hathaway (BRK/B) and The Allstate Corp. (ALL). This indicates that PGR has offered better risk-adjusted returns. For example, in Q2 2024, PGR's Sharpe Ratio ranged from 1.6 to 2.91, while BRK/B's ranged from 1.53 to 2.05, and ALL's ranged from 1.76 to 2.21.
  • The beta values for BRK/B have generally remained below 1, indicating that it is less volatile than the market. However, BRK/B's beta is generally higher than those of PGR and ALL, suggesting it is more sensitive to market movements than its peers.

• Overall Assessment:

  • Berkshire Hathaway (BRK/B) has shown lower returns compared to Progressive Corp. (PGR) over the analyzed periods, but it has also exhibited lower volatility. This suggests that BRK/B may be a more conservative investment option compared to PGR.
  • Progressive Corp. (PGR) has demonstrated higher risk-adjusted returns, as indicated by its higher Sharpe Ratio. However, it also carries a higher level of volatility.
  • The Allstate Corp. (ALL) has shown higher volatility than BRK/B and lower Sharpe ratios than PGR, indicating it may be a riskier investment with less favorable risk-adjusted returns.
  • Recent trends indicate that BRK/B and PGR have similar risk-adjusted returns, while ALL lags behind.

Peers Fundamentals(as of 2025-03-31)

1. Market Position and Size:

   • Berkshire Hathaway (BRK/B) has a significantly larger market capitalization of $1,086,370.95 million compared to Progressive Corp. (PGR) at $162,454.39 million and The Allstate Corp. (ALL) at $53,630.74 million. This indicates BRK/B's dominant position in the market.
   • BRK/B's substantial market cap is supported by its high revenue of $371,289 million, net income of $80,896 million, and operating cash flow of $30,929 million, which are significantly higher than its peers.
   • BRK/B's size and market position reflect its diversified business model and extensive holdings across various industries, giving it a competitive edge.

2. Profitability and Efficiency:

   • BRK/B's Gross Profit Margin of 23.58% is greater than the industry average of 20.72%, indicating efficient operations.
   • BRK/B's EBITDA Margin of 18.78% is slightly greater than the industry average of 18.43%, showing good operational efficiency.
   • BRK/B's Net Profit Margin of 21.79% significantly exceeds those of PGR (11.1%), ALL (6.19%), and the industry average (6.71%), demonstrating superior profitability.
   • However, BRK/B's Return on Average Assets (7.24%), Return on Average Total Equity (13.2%), Return on Average Total Capital (12.64%), and Return On Average Invested Capital (11.01%) are less than PGR's, indicating that PGR is more efficient in generating returns.

3. Financial Health and Stability:

   • BRK/B's Current Ratio of 6.35 and Quick Ratio of 6.02 are significantly greater than those of PGR (0.79), ALL (0.45), and the industry averages (1.58 and 5.24, respectively), indicating strong liquidity.
   • BRK/B's Total Debt to Total Equity Ratio of 21.44% is less than PGR (23.81%), ALL (36.66%), and the industry average (42.87%), suggesting a more conservative capital structure.
   • BRK/B exhibits strong liquidity and a conservative debt position, indicating a robust financial structure and lower financial risk compared to its peers.

4. Valuation and Market Perception:

   • BRK/B's Enterprise Value To Sales of 2.54 is greater than PGR (2.21), ALL (1.01), and the industry average (2.03), suggesting that the market values its sales relatively highly.
   • BRK/B's Enterprise Value To EBITDA of 13.54 is greater than the industry average of 12.0, indicating a premium valuation.
   • BRK/B's Price To Earnings of 13.42 is less than PGR (18.66) and the industry average (16.8), but less than ALL (13.84), suggesting that the market may be undervaluing its earnings potential.
   • BRK/B's Price to Book Ratio of 1.66 is less than PGR (5.61), ALL (2.68), and the industry average (1.97), indicating a lower valuation based on its book value.
   • BRK/B's Price To Sales Ratio of 2.93 is greater than PGR (2.07), ALL (0.83), and the industry average (1.7), suggesting a higher valuation based on its sales.
   • BRK/B's Price to Free Cash Flow of 90.04 is significantly greater than PGR (10.33), ALL (5.98), and the industry average (-4.09), indicating a premium valuation based on its free cash flow.

5. Cash Flow and Capital Management:

   • BRK/B's Net Operating Cash Flow of $30,929 million is greater than PGR ($16,026.6 million) and ALL ($9,229 million), indicating strong cash generation.
   • BRK/B's Total Capital Expenditure of $18,864 million is significantly greater than PGR ($293.8 million) and ALL ($261 million), reflecting its investments in diverse businesses.
   • BRK/B's Free Cash Flow of $12,065 million is less than PGR ($15,732.8 million) but greater than ALL ($8,968 million), indicating that its free cash flow is impacted by its high capital expenditure.
   • BRK/B's substantial capital expenditures reflect its investments in diverse businesses, while its strong operating cash flow supports these investments.

6. Growth and Future Prospect:

   • BRK/B's revenue growth has been relatively stable, with a 5-year CAGR of 7.79%.
   • BRK/B's net income and EPS growth rates have been highly volatile, with significant year-to-year fluctuations.
   • BRK/B's free cash flow growth has been negative in the most recent year (-61.06%), and its 5-year CAGR is also negative (-11.41%), which is a potential concern.
   • BRK/B's EBIT margin growth has been positive, with a 5-year CAGR of 3.77%.
   • BRK/B's competitive position is mixed. While it has shown strong growth in certain areas, its overall growth profile is less impressive than some of its peers.

7. Potential for Investment:

   • Berkshire Hathaway presents a mixed investment profile. Its size, stability, and profitability make it an attractive option for risk-averse investors seeking long-term capital appreciation.
   • However, its relatively lower return on equity and recent decline in free cash flow growth may deter investors seeking higher returns or faster growth.
   • Its valuation metrics suggest that the market may be undervaluing its earnings potential, presenting a potential opportunity for value investors.

8. Key Risks and Considerations:

   • BRK/B's high capital expenditure may impact its free cash flow generation.
   • BRK/B's volatile net income and EPS growth rates may create uncertainty for investors.
   • BRK/B's size and complexity may make it difficult to manage and maintain its competitive advantages.
   • BRK/B's reliance on a few key individuals, such as Warren Buffett, poses a key person risk.

9. Overall Assessment:

   • Berkshire Hathaway exhibits strong financial health, characterized by high profitability, robust liquidity, and a conservative capital structure.
   • While its return on equity and free cash flow generation are less impressive than some peers, its overall financial position is solid, reflecting its diversified business model and prudent management.
   • Berkshire Hathaway holds a dominant competitive position within its peer group and the broader industry, owing to its massive market capitalization, diversified operations, and strong financial performance.