Our stock screening tool has pinpointed BERKSHIRE HATHAWAY INC-CL B (NYSE:BRK.B) as an undervalued stock. NYSE:BRK.B maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.
Valuation Assessment of NYSE:BRK.B
ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:BRK.B scores a 9 out of 10:
- A Price/Earnings ratio of 0.02 indicates a rather cheap valuation of BRK.B.
- BRK.B's Price/Earnings ratio is rather cheap when compared to the industry. BRK.B is cheaper than 100.00% of the companies in the same industry.
- BRK.B is valuated cheaply when we compare the Price/Earnings ratio to 25.59, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 0.01 indicates a rather cheap valuation of BRK.B.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of BRK.B indicates a rather cheap valuation: BRK.B is cheaper than 100.00% of the companies listed in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 18.75, BRK.B is valued rather cheaply.
- Based on the Enterprise Value to EBITDA ratio, BRK.B is valued cheaper than 83.84% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, BRK.B is valued a bit cheaper than 69.70% of the companies in the same industry.
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- The decent profitability rating of BRK.B may justify a higher PE ratio.
- BRK.B's earnings are expected to grow with 12.33% in the coming years. This may justify a more expensive valuation.
Analyzing Profitability Metrics
ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:BRK.B, the assigned 7 is noteworthy for profitability:
- BRK.B has a better Return On Assets (8.34%) than 85.86% of its industry peers.
- BRK.B has a Return On Equity of 16.09%. This is amongst the best in the industry. BRK.B outperforms 82.83% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 3.54%, BRK.B is in the better half of the industry, outperforming 74.75% of the companies in the same industry.
- The 3 year average ROIC (3.32%) for BRK.B is below the current ROIC(3.54%), indicating increased profibility in the last year.
- The Profit Margin of BRK.B (26.09%) is better than 83.84% of its industry peers.
- BRK.B's Operating Margin has improved in the last couple of years.
- BRK.B's Gross Margin has improved in the last couple of years.
Looking at the Health
ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:BRK.B has earned a 5 out of 10:
- BRK.B's Altman-Z score of 1.65 is fine compared to the rest of the industry. BRK.B outperforms 70.71% of its industry peers.
- BRK.B has a Debt to FCF ratio of 4.83. This is in the better half of the industry: BRK.B outperforms 66.67% of its industry peers.
- A Debt/Equity ratio of 0.23 indicates that BRK.B is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.23, BRK.B is in the better half of the industry, outperforming 61.62% of the companies in the same industry.
- With a decent Current ratio value of 1.47, BRK.B is doing good in the industry, outperforming 63.64% of the companies in the same industry.
Evaluating Growth: NYSE:BRK.B
ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:BRK.B scores a 6 out of 10:
- The Earnings Per Share has grown by an nice 10.09% over the past year.
- BRK.B shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.98% yearly.
- Looking at the last year, BRK.B shows a quite strong growth in Revenue. The Revenue has grown by 15.03% in the last year.
- The Earnings Per Share is expected to grow by 12.33% on average over the next years. This is quite good.
- The Revenue is expected to grow by 13.58% on average over the next years. This is quite good.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
More Decent Value stocks can be found in our Decent Value screener.
Check the latest full fundamental report of BRK.B for a complete fundamental analysis.
This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.