NYSE:BRK.B, an undervalued stock with good fundamentals.

Last update: Oct 4, 2023

Consider BERKSHIRE HATHAWAY INC-CL B (NYSE:BRK.B) as a top value stock, identified by our stock screening tool. NYSE:BRK.B shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Analyzing Valuation Metrics

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:BRK.B has achieved a 9 out of 10:

A Price/Earnings ratio of 0.02 indicates a rather cheap valuation of BRK.B.
Compared to the rest of the industry, the Price/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.
The average S&P500 Price/Earnings ratio is at 25.11. BRK.B is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 0.01, the valuation of BRK.B can be described as very cheap.
Based on the Price/Forward Earnings ratio, BRK.B is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 18.41. BRK.B is valued rather cheaply when compared to this.
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 the industry average as 69.70% of the companies are valued more expensively.
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.
A more expensive valuation may be justified as BRK.B's earnings are expected to grow with 12.33% in the coming years.

What does the Profitability looks like for NYSE:BRK.B

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:BRK.B has earned a 7 out of 10:

BRK.B has a better Return On Assets (8.34%) than 85.86% of its industry peers.
With an excellent Return On Equity value of 16.09%, BRK.B belongs to the best of the industry, outperforming 82.83% of the companies in the same industry.
With a decent Return On Invested Capital value of 3.54%, BRK.B is doing good in 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.
BRK.B's Profit Margin of 26.09% is amongst the best of the industry. BRK.B outperforms 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.

Unpacking NYSE:BRK.B's Health Rating

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:BRK.B scores a 5 out of 10:

BRK.B's Altman-Z score of 1.64 is fine compared to the rest of the industry. BRK.B outperforms 70.71% of its industry peers.
BRK.B has a better Debt to FCF ratio (4.83) than 66.67% of its industry peers.
BRK.B has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.23, BRK.B is doing good in the industry, outperforming 61.62% of the companies in the same industry.
Looking at the Current ratio, with a value of 1.47, BRK.B is in the better half of the industry, outperforming 63.64% of the companies in the same industry.

ChartMill's Evaluation of Growth

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:BRK.B has received a 6 out of 10:

The Earnings Per Share has grown by an nice 10.09% over the past year.
Measured over the past years, BRK.B shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.98% on average per year.
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.
BRK.B is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.33% yearly.
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.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Our latest full fundamental report of BRK.B contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.