After Earnings, Is Berkshire Hathaway Stock a Buy, a Sell, or Fairly Valued?

Berkshire Hathaway BRK.B released its fourth-quarter earnings report on Feb. 28. Here’s Morningstar’s take on Berkshire Hathaway’s earnings and stock.

Key Morningstar Metrics for Berkshire Hathaway

• Fair Value Estimate

  : $510.00

• Morningstar Rating

  : ★★★

• Morningstar Economic Moat Rating

  : Narrow

• Morningstar Uncertainty Rating

  : Low

What We Thought of Berkshire Hathaway’s Q4 Earnings

Along with Berkshire Hathaway’s release of its fourth-quarter earnings results on Feb. 28, the company’s new CEO, Greg Abel, shared his thoughts on a post-Warren-Buffett era in his first annual shareholder letter.

Why it matters: Abel’s debut annual letter to shareholders was slightly different from letters from former CEO Buffett, as he laid out his thoughts on Berkshire’s past and future.

• Abel emphasized the importance of maintaining Berkshire’s culture, decentralized business model, integrity, financial strength, and capital discipline. While praising many of Berkshire’s businesses, Abel highlighted the need for some, like BNSF, to improve under his watch.
• Abel also hinted at changes in the equity investment portfolio—with Kraft Heinz being labeled as disappointing—but noted that Ted Weschler will continue to oversee a portion of the portfolio.
• Abel reaffirmed Buffett’s long-standing belief that retained earnings are better used for internal growth and acquisitions, noting that dividends are off the table for now and highlighting that share repurchases will be made sparingly at discounts to intrinsic value.

The bottom line: Abel stayed conservative in his debut annual letter, which was not unexpected, as Berkshire remains in good shape, highlighting continuity over dramatic change.

Key stats: Although Berkshire had a stellar run of results under Buffett’s leadership, returns have been more pedestrian during the past decade.

• Book value per share increased at an 18.1% CAGR during 1965-2025, compared with a 10.5% annualized return for the S&P 500 TR Index. That said, over the past decade, Berkshire’s annualized growth in book value per share of 12.4% trailed the index’s 14.8% CAGR.

• While Berkshire’s stock generated an annualized return of 19.8% during 1965-2025, its share price performance of 14.3% per year on average during the past decade was slightly behind the index.

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Fair Value Estimate for Berkshire Hathaway

With its 3-star rating, we believe Berkshire Hathaway’s stock is fairly valued compared with our long-term fair value estimate of $510 per share, which is equivalent to 1.53 times our estimate for Berkshire’s book value per share at the end of 2025 and 1.38 times our estimate for 2026. For some perspective, during the past five (10) years, the shares have traded at an average of 1.49 (1.46) times trailing calendar year-end book value per share. We use a 9% cost of equity in our valuation and assume that at the very least, Berkshire pays the required 15% corporate alternative minimum tax on adjusted financial statement income.

Read more about Berkshire Hathaway’s fair value estimate.

Economic Moat Rating

We’ve historically believed that Berkshire’s economic moat is more than a sum of its parts, although the parts that make up the whole are moaty in their own regard. The insurance operations—Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group—remain important contributors to the overall business. Not only are they expected to account for 46% of Berkshire’s pretax earnings on average the next five years (and 52% of our firmwide valuation), but they are overcapitalized (maintaining a larger-than-normal equity investment portfolio for a property and casualty insurer).

We don’t believe the insurance industry is particularly conducive to the development of maintainable competitive advantages. While there are some high-quality firms in the industry (with Berkshire having some of the best operators in the segments where it competes), the product that insurers sell is basically a commodity, with excess returns difficult to achieve on a consistent basis. Buyers of insurance are not inclined to pay a premium for brands, and the products themselves are easily replicable.

Read more about Berkshire Hathaway’s economic moat.

Financial Strength

Berkshire’s strong balance sheet and liquidity are among its most enduring competitive advantages. The company’s insurance operations are well overcapitalized, carrying greater levels of equity, fixed income, and cash relative to its reserves. Berkshire generates large amounts of free cash flow and maintains significant levels of cash and cash equivalents on its balance sheet, amounting to $344.1 billion at the end of June 2025.

Berkshire likes to keep at least $30 billion in cash on hand as a backstop for its insurance operations, with each of the firm’s businesses likely requiring at least 2% of annual revenue as operating cash, as well as additional carve-outs set aside for capital expenditures. As a result, Berkshire (by our estimates) entered the third quarter of 2025 with an excess cash balance of around $302 billion—dry powder that could be used for acquisitions, investments, share repurchases, or dividends.

Read more about Berkshire Hathaway’s financial strength.

Risk and Uncertainty

Our Uncertainty Rating for Berkshire is Low. We do not consider any of the environmental, social, or governance issues that exist for the firm to be material enough to affect our rating. This is due to the company’s lower exposure to some of the main ESG risks inherent to the industries where it competes. Berkshire has, however, tended to score lower on governance issues because of the makeup of its board and board committees, the unequal voting structure of its Class A and Class B shares, and its lack of engagement and opaqueness on governance issues.

Berkshire faces the risk that insurance claims exceed loss reserves or that material impairments affect its investment portfolio. Several of the firm’s key businesses operate in industries subject to higher degrees of regulatory oversight, which could affect future business combinations, as well as the setting of rates charged to customers. Many of the company’s noninsurance operations are exposed to the cyclicality of the US economy, with results suffering during economic slowdowns.

Berkshire is exposed to foreign currency, equity price, and credit default risk through its various investments and operating companies. While derivative contracts underwritten by the company could affect the firm’s earnings and capital position, especially during more volatile markets, substantially all these contracts have expired (starting in 2019 and continuing to do so until the end of 2025), with the exposure to losses in the future being relatively insignificant.

Read more about Berkshire Hathaway’s risk and uncertainty.

BRK.B Bulls Say

• Book value per share, which is a good proxy for measuring changes in Berkshire’s intrinsic value, increased at an estimated 18.3% CAGR during 1965-2024, compared with a 10.4% annualized return for the S&P 500 TR index.
• Berkshire’s stock performance has generally been solid, increasing at a 14.9% (11.7%) CAGR during 2020-24 (2015-24), compared with a 14.5% (13.1%) average annual return for the S&P 500 TR index.
• At the end of June 2025, Berkshire had $174 billion in insurance float. The cost of the firm’s float has generally been negative during much of the past two decades.

BRK.B Bears Say

• Given its size, Berkshire’s biggest hurdle continues to be its ability to consistently find deals that not only add value but are large enough to be meaningful.
• Berkshire’s insurance operations face competitive and highly cyclical markets that occasionally produce large losses, and several of its noninsurance operations are economically sensitive and focused on US markets.

This article was compiled by Rachel Schlueter.