How Berkshire Hathaway stock has been trading

Berkshire Hathaway (BRK.B) has seen relatively muted short term moves, with the stock roughly flat over the past week and posting a gain of about 3% over the past month.

Over longer periods, the picture is mixed. The stock has declined about 4% in the past 3 months and about 2% over the past year, while total return over 3 and 5 years remains clearly positive.

At a share price of US$478.63, Berkshire Hathaway’s short term share price momentum has cooled compared with its clearly positive 3 and 5 year total shareholder returns. This suggests that recent moves may reflect shifting views on future growth and risk rather than any sharp re rating.

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With the stock drifting in recent months, but Berkshire Hathaway still carrying a value score of 5 and trading at a discount to some estimates of intrinsic value, is this a genuine buying opportunity, or is the market already pricing in future growth?

Most Popular Narrative: 99.9% Undervalued

According to the most followed narrative for Berkshire Hathaway, a fair value of $669,764.35 per BRK.B share sits far above the last close of $478.63. This puts the spotlight on the assumptions behind such an aggressive gap.

I am concentrated in 8 companies. Tesla, Meta, Nvidia, Amazon, PLTR, Google, Apple and BRKB. Every time the market drops, my said companies drop and BRKB go up. I have noticed it acts like a safe treasury, but of course, I still know this is a bet.

The narrative leans on high profit margins, a rich future earnings multiple and a relatively low discount rate. Want to see how those inputs combine into that sky high fair value and what that implies for long term compounding?

Result: Fair Value of $669,764.35 (UNDERVALUED)

However, this depends on margin costs remaining manageable and on Berkshire Hathaway continuing to justify a rich profit margin and future P/E without disappointing investors.

Next Steps

With sentiment split between opportunity and caution, it makes sense to move quickly and review the underlying data yourself before forming a view. A good place to start is 2 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.