• If you are wondering whether Berkshire Hathaway is fairly priced today or if there is value still on the table, this article will walk through what the numbers are saying about the stock.
• The share price closed at US$490.03 recently, with returns of a 1.8% decline over 7 days, 2.0% decline over 30 days, 1.4% decline year to date and 4.8% decline over 1 year. The 3 year and 5 year returns sit at 67.0% and 95.2% respectively.
• Recent coverage around Berkshire Hathaway has focused on its role as a diversified holding company and long standing presence in the US market, giving investors a broad mix of operating businesses and publicly listed investments. That backdrop helps frame the share price moves as investors weigh the appeal of a long term compounder against shorter term market sentiment.
• Our valuation model gives Berkshire Hathaway a score of 5 out of 6. Next we will walk through the main valuation approaches behind that result, before finishing with a way to look beyond any single model to understand what the stock might really be worth.

Approach 1: Berkshire Hathaway Excess Returns Analysis

The Excess Returns model looks at how much profit a company can earn on its equity above the return that shareholders are assumed to require. In other words, it compares Berkshire Hathaway’s return on equity to its cost of equity, then projects how long that value creation can continue.

For Berkshire Hathaway, the model uses a book value of $498,663.02 per share and a stable book value estimate of $545,417.94 per share, based on weighted future book value estimates from 2 analysts. Using a median return on equity from the past 5 years, the model arrives at a stable EPS of $66,585.43 per share.

The assumed cost of equity is $40,323.54 per share, which implies an excess return of $26,261.89 per share. That excess return, combined with an average return on equity of 12.21%, is capitalized to arrive at an intrinsic value of about $803.39 per share under this Excess Returns framework.

Compared with the recent share price of US$490.03, this excess returns valuation suggests the stock is 39.0% undervalued on this model.

Result: UNDERVALUED

Our Excess Returns analysis suggests Berkshire Hathaway is undervalued by 39.0%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.

Approach 2: Berkshire Hathaway Price vs Earnings

For a profitable company like Berkshire Hathaway, the P/E ratio is a useful shorthand for how much investors are currently paying for each dollar of earnings. It links directly to what you get today in earnings terms, rather than focusing only on long term projections.

What counts as a “normal” or “fair” P/E depends on how the market views a company’s growth potential and risk profile. Higher growth or lower perceived risk can support a higher multiple, while more uncertainty or lower growth typically lines up with a lower one.

Berkshire Hathaway’s current P/E ratio is 15.79x. That sits below the Diversified Financial industry average P/E of 17.57x and also below the peer group average of 22.02x. Simply Wall St’s Fair Ratio framework estimates a P/E of 17.10x for Berkshire Hathaway, which reflects factors such as its earnings profile, margins, industry, market cap and risk characteristics.

The Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for company specific features rather than assuming all firms deserve similar multiples. Comparing Berkshire Hathaway’s current 15.79x P/E to the 17.10x Fair Ratio points to the shares trading below that fair multiple.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Berkshire Hathaway Narrative

Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives, which let you attach a clear story about Berkshire Hathaway to your own assumptions for fair value, future revenue, earnings and margins, then connect that story to a number you can compare with the current price. A Narrative on Simply Wall St’s Community page is an easy to use framework where you spell out how you see the business, link that view to a financial forecast, and arrive at a fair value you can track over time. Because Narratives are refreshed when new information comes in, such as Berkshire’s Q4 2025 operating earnings of $10.2b, cash and equivalents of $373.3b, or an updated fair value estimate of $532.08 per share, they help you quickly see whether your story still holds. For example, one Berkshire Hathaway Narrative might focus on the company as a defensive fortress with a fair value around $532.08 per share. Another might set a lower or higher fair value based on a different view of its cash use, insurance cycle or long term role in an investor’s portfolio.

Do you think there's more to the story for Berkshire Hathaway? Head over to our Community to see what others are saying!

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.