Skip to Content
Stock Analyst Update

Berkshire's Businesses, Portfolio in Solid Shape

We expect to raise our Class A (B) share fair value estimate slightly.

While wide-moat-rated Berkshire Hathaway's (BRK.A) (BRK.B) reported fourth-quarter (full-year) results were in line with our expectations, we expect to raise our $480,000 ($320) per Class A (B) share fair value estimate slightly to account for the positioning of the company's businesses and investment portfolio coming into 2022.

Fourth-quarter (full-year) revenue, which includes both realized and unrealized gains/losses from Berkshire's investments and derivatives portfolios, declined 27.0% (increased 23.9%) to $75.8 ($354.6) billion from $103.7 ($286.3) billion in the prior year's period(s), on a marked decrease (increase) in investment gains year over year. Excluding the impact of investment and derivative gains/losses and other adjustments, fourth-quarter (full-year) operating revenue increased 11.5% (12.5%) to $71.8 ($276.1) billion. Operating earnings, exclusive of the impact of investment and derivative gains/losses, increased 45.1% (25.2%) year over year to $7.3 ($27.5) billion during the December quarter (full year) of 2021. When including the impact of the investment and derivative gains/losses, operating earnings increased 10.6% (111.2%) to $39.6 ($89.8) billion from $35.8 ($42.5) billion in the prior year's period(s).

Book value per share (by our estimates) increased 8.3% sequentially to $342,622 (from $316,443 at the end of September), above our forecast of $332,265 (which did not include as much of a contribution from the investment portfolio as occurred during the December quarter). The company closed out the fourth quarter with $146.7 billion in cash and cash equivalents, up from $138.3 billion at the end of last year, despite buying back $27.0 billion worth of Berkshire's stock during 2021. By our calculations, Berkshire came into the first quarter of 2022 with around $112 billion in excess cash on hand that could be committed to investments, acquisitions, and share repurchases.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.