Berkshire Hathaway, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm primarily engages in the insurance and reinsurance of property and casualty risks business. Berkshire Hathaway was founded in 1889 and is based in Omaha, Nebraska.
BRK.B Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for BRK.B, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Berkshire Hathaway Inc ranked in the 55th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 36% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for BRK.B, they are:
Berkshire Hathaway Inc's weighted average cost of capital (WACC) is 7%; for context, that number is higher than merely 16.39% of tickers in our DCF set.
Relative to other stocks in its sector (Financial Services), Berkshire Hathaway Inc has a reliance on debt greater than 53.77% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CUII, SLF, FSAM, CME, and AFL can be thought of as valuation peers to BRK.B, in the sense that they are in the Financial Services sector and have a similar price forecast based on DCF valuation.
Ian's Million Fund, "IMF," is a real-money portfolio that I've written about monthly since January 2016 here at Seeking Alpha. The portfolio is a largely buy-and-hold group of ~130 stocks. Each month, I buy 10-30 of the most compelling stocks available at then-current prices, deploying $1,000 of my capital plus...
The U.S. Federal Reserve bought $428 million in bonds of individual companies through mid-June, making investments in household names like Walmart and AT&T as well as in major oil firms, tobacco giant Philip Morris, and a utility subsidiary of billionaire Warren Buffett's Berkshire Hathaway holding company.
Before I jump into the details, I would like to stress that the main purpose of this article is to provoke a thoughtful discussion on Berkshire Hathaway's (BRK.A) (BRK.B) return potential by highlighting some of the most obvious (in my opinion) hurdles that it could face going forward. Source: YCharts...