Morningstar

Berkshire Hathaway Earnings: Strong Insurance Results Continue to Lift Revenue and Profitability

Record cash on hand as Buffett slashes Apple stock position.

AUGUST 6th 2022: Warren Buffett's conglomerate holding company Berkshire Hathaway Inc.
Securities In This Article
Berkshire Hathaway Inc Class A
(BRK.A)
Berkshire Hathaway Inc Class B
(BRK.B)

Key Morningstar Metrics for Berkshire Hathaway

What We Thought of Berkshire Hathaway’s Earnings

Wide-moat-rated Berkshire Hathaway BRK.A/BRK.B reported adjusted, second-quarter operating results that were more or less in line with our expectations. We are leaving our $640,000 per Class A and $427 per Class B share fair value estimates in place.

Second-quarter (first-half) revenue, including unrealized and realized gains/losses from Berkshire’s investment portfolios, decreased to $117.5 billion ($209.3 billion) from $125.6 billion ($245.7 billion) in the year-ago period(s) as the company lapped significant unrealized and realized investment gains during the first half of 2023. Excluding the impact of investment gains/losses and other adjustments, second-quarter operating revenue increased 1.2%, and first-half OR increased 3.2% year over year to $93.7 billion ($183.5 billion).

Berkshire Hathaway Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct. Data as of .

Operating earnings, exclusive of investment gains/losses, increased 15.5% (26.0%) year over year to $11.6 billion ($22.8 billion) during the June quarter (first half of the year), with strong insurance results continuing to compensate for weakness in other segments. When including the impact of the investment gains/losses, reported operating earnings decreased to $30.3 billion ($43.1 billion) from $35.9 billion ($71.4 billion) in the prior year’s period(s).

Book value per share, which still serves as a decent proxy for measuring changes in Berkshire’s intrinsic value, increased 4.5% sequentially and 11.4% year over year to $415,668 (from $397,627 and $372,966 at the end of March 2024 and June 2023, respectively).

Record Cash on Hand As Berkshire Slashes Apple Stock

Of note was the fact that Berkshire sold off close to half of its Apple AAPL stake and invested the proceeds in US Treasury Bills.

The company closed out the second quarter with a record $276.9 billion in cash and cash equivalents, up from $189.0 billion at the end of March 2024. Free cash flow reached $9.1 billion in the second quarter, and Berkshire also sold on a net basis $75.5 billion of its stock holdings (primarily Apple, from what we can tell) in an apparent derisking move (noting that Apple’s shares ran up 23% during the second quarter).

Unfortunately, Berkshire repurchased just $356 million of its own shares during the June quarter, the firm’s lowest quarterly buyback total since CEO Warren Buffett started acquiring the company’s stock back in the third quarter of 2018. From our perspective, we weren’t too surprised, as the shares have stayed close to our fair value estimate the past few months.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Greggory Warren, CFA

Strategist
More from Author

Greggory Warren, CFA, is a strategist, AM Financial Services, for Morningstar*. He covers the traditional US- and Canadian-based traditional asset managers, as well as the alternative asset managers and Berkshire Hathaway. Over the course of his career, Warren has covered not only financial services names but companies from the consumer staples and consumer cyclicals sectors, and been involved in portfolio stock selection and management.

Prior to joining Morningstar in 2005, Warren worked as a buy-side equity analyst for more than eight years, covering consumer staples and consumer cyclicals. Before assuming his current role at Morningstar in 2017, Warren covered the financial-services sector as a senior analyst since late 2008. Prior to that time, he covered the non-alcoholic beverage manufacturers and distributors, packaged food firms, food service distributors, and tobacco companies.

Warren holds a bachelor's degree in accounting and English from Augustana College. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Chicago.

During 2014-19, Warren was selected to participate each year on the analyst panel at Berkshire Hathaway’s annual meeting, asking questions directly of Warren Buffett and Charlie Munger. The analyst panel was disbanded ahead of Berkshire’s 2020 annual meeting. Warren also ranked second in the investment services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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