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

Berkshire Hathaway released its first-quarter earnings report on May 2. Here’s Morningstar’s take on Berkshire Hathaway’s earnings and stock.

Key Morningstar Metrics for Berkshire Hathaway

• Fair Value Estimate
  : $765,000.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Low

What We Thought of Berkshire Hathaway’s Q1 Earnings

New CEO Greg Abel hosted his first annual Berkshire Hathaway meeting on May 2 and reiterated his commitment to Warren Buffett’s principles and the company’s culture. His primary goal seems to be maintaining the status quo with a few adjustments around the edges.

Why it matters: During the question-and-answer segments of the annual meeting, Abel was joined by Ajit Jain, head of Berkshire’s insurance operations, Katie Farmer, president and CEO of BNSF Railway, and Adam Johnson, president of the consumer products, service, and retailing businesses. Former CEO Warren Buffett also had his say in two lengthy asides. Summing up our key takeaways, we highlight the following:

• Abel reiterated his commitment to Buffett’s principles and Berkshire’s culture.
• Abel’s primary goal seems to be maintaining the status quo with a few adjustments around the edges.
• Berkshire’s expanding cash hoard will be a bigger topic of conversation following the change of management.
• Abel will be scrutinized far more than Buffett ever was as an operator and investor.
• Berkshire’s shares are modestly undervalued in a slightly undervalued market based on our Morningstar US Market Fair Value gauge.

The bottom line: Overall, we think the first annual meeting without Buffett at the helm was a calm affair filled with confidence on the part of Berkshire’s managers that they have what it takes to move the company forward.

• Given the decline in the shares this year—5.9% year to date—narrow-moat Berkshire is modestly undervalued relative to our fair value estimate for a company with a Low Morningstar Uncertainty Rating.
• At their May 1 closing price, the company’s shares were trading at a 7% discount to our $765,000 (Class A) and $510 (Class B) fair value estimates. This infers a high-single-digit gain for investors, should the shares revert to our fair value estimates.

Fair Value Estimate for Berkshire Hathaway

With its 4-star rating, we believe Berkshire stock is moderately undervalued compared with our long-term fair value estimate of $765000, after updating our forecasts for the company’s operating businesses and insurance investment portfolio to incorporate changes since our last revision. Our valuation is equivalent to 1.45 and 1.35 times our estimates for Berkshire’s book value per share, respectively, at the end of 2026 and 2027. For some perspective, during the past five (10) years, the shares have traded at an average of 1.51 (1.45) times trailing calendar year-end book value per share.

Read more about Berkshire Hathaway’s fair value estimate.

Economic Moat Rating

The insurance operations—Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group—remain important contributors to the overall business, which has a narrow economic moat. Not only are they expected to account for 46% of Berkshire’s pretax earnings on average during the next five years (and 51% of our firmwide valuation), but they are overcapitalized (maintaining a larger-than-normal equity investment portfolio for a property and casualty insurer). Although we see the potential for Berkshire to get back on track through more directed operational efficiencies, as well as some financial engineering, none of which were happening on Buffett’s watch, this will take some time to come to fruition.

As for Berkshire’s reinsurance arm, we believe BHRG has at best a narrow economic moat around its business. We think Berkshire Hathaway Energy is endowed with a narrow economic moat. We do not believe regulated utilities can establish more than a narrow economic moat, even with their difficult-to-replicate networks of power generation, transmission, and distribution. While Berkshire’s operating businesses have generally provided the firm with a narrow moat on a combined basis, it was management’s ability to produce additional excess returns from the cash flows thrown off by its disparate operations that historically pushed our moat rating into wide territory. But it became increasingly hard to justify that moat rating, not just because Buffett’s departure will likely dampen future investment returns, but also because we have continued to see slippage in some of the moat sources that support the economic moats in a few of its main operating businesses.

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 free cash flow and maintains significant cash and cash equivalents on its balance sheet, amounting to $373.1 billion at the end of 2025. We expect Berkshire to keep at least $35 billion in cash on hand as a backstop for its insurance operations, with each of the firm’s businesses 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 2026 with an excess cash balance of around $331.8 billion—dry powder that could be used for acquisitions, investments, share repurchases, or dividends. While Berkshire is unlikely to pay a dividend as long as Buffett is running the show, the principal insurance subsidiaries could (without prior regulatory approval) pay out as much as $31 billion in ordinary dividends during 2025. We believe the company should be able to easily buy back $8 billion-$9 billion of its own common stock quarterly during 2025-29, which is what we’ve forecast for the firm on a regular basis in our initial five-year forecast.

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 firm’s environmental, social, or governance issues 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 in which it competes. However, Berkshire has 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. Berkshire is also exposed to foreign currency, equity prices, and credit default risk through its various investments and operating companies.

Read more about Berkshire Hathaway’s risk and uncertainty.

BRK.A Bulls Say

• Book value per share, which is a good proxy for measuring changes in Berkshire’s intrinsic value, increased at an estimated 18.1% CAGR during 1965-2025, compared with a 10.5% annualized return for the S&P 500 TR index.
• Berkshire’s stock performance has generally been solid, increasing at a 16.8% (14.3%) CAGR during 2021-25 (2016-25), compared with a 14.4% (14.8%) average annual return for the S&P 500 TR index.
• At the end of 2025, Berkshire had $176 billion in insurance float. The cost of the firm’s float has generally been negative during much of the past two decades.

BRK.A 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 also large enough to be meaningful.
• Another big issue facing the firm has been the longevity of Buffett, especially following the death of longtime managing partner Charlie Munger in November 2023.
• 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 Jillian Moore.