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Stock Analyst Update

A Weaker First Quarter for Berkshire

Company reports solid top-line, but weaker bottom-line, results ahead of annual meeting.

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Wide moat-rated  Berkshire Hathaway (BRK.B) released first-quarter earnings that were somewhat mixed, with the company reporting solid top-line, but weaker bottom-line, results. We do, however, expect to increase our fair value estimate for the firm as we incorporate these results into our valuation and adjust our future forecasts for Berkshire's subsidiaries to include corporate tax reform in the near to medium term.

First-quarter revenue increased 25.0% year over year to $65.2 billion, with the biggest contribution coming from Berkshire's insurance operations, which benefited from the inclusion of $10.2 billion in earned premiums from the AIG retroactive insurance agreement. Stronger top-line results from BNSF, which finally saw coal shipments return to more normalized levels, also helped. Absent the AIG deal, revenue increased 5.4% to $55.0 billion during the first quarter.

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