Berkshire Hathaway Price Target Cut to $209000.00 (BRK/A)
Nov 10 2015
In Q3, earnings per B share fell 3.6% to $1.85 but topped analyst consensus for $1.80, according to Thomson Reuters data. "The old guy still has a few smarts upstairs".
Book value, reflecting assets minus liabilities and Buffett's preferred growth gauge, was $151,083 per Class A share as of September 30, up 0.9 percent from the end of June.
The bright spot for Berkshire was its holdings in Kraft Heinz.
Berkshire's revenue grew 15 percent to almost $59 billion.
"He's put a lot of capital to work in these two investments and they've underperformed", Jim Shanahan, an analyst at Edward Jones & Co., said in a phone interview of IBM and AmEx. "You have to wonder if he held onto these investments too long". He said 20% of that sum was in Berkshire.
In auto insurance, GEICO built on its supremacy. While that's down from last year's third quarter, it's an improvement from a loss in the second quarter. From a profitability perspective, Berkshire's insurance operations had a pre-tax underwriting gain of US$643 million compared with an underwriting gain of US$976 million during the third quarter of 2014. He wants to keep a $20 billion cash cushion.
In today's session Berkshire Hathaway Inc. the unit added an electric transmission business in Canada late previous year.
Among Berkshire's larger businesses, profit fell 34 percent from insurance underwriting to $414 million, rose 12 percent at the BNSF railroad to $1.16 billion, and rose 13 percent to $786 million at Berkshire Hathaway Energy.
Berkshire has close to 90 operating businesses including the General Re reinsurer, Lubrizol chemicals, NetJets business jets and Dairy Queen ice cream. Berkshire doesn't break down results for each business in the segment.
On August 10, Berkshire announced its largest company acquisition ever, Precision Castparts (NYSE: PCP), which makes components for aerospace and other industries, for $37.2 billion, including debt.
The decline came in part as "we recorded estimated losses of $130 million" related to an explosion at the port of Tianjin, China, the company said. That deal is expected to close next year. The company has a market cap of $334.92 billion. Heinz's merger with packaged food giant Kraft in July, which created the third largest USA packaged food company, gave Berkshire a $4.4 billion total gain for the quarter. "Warren Buffett, the billionaire, is getting richer on cost cuts while 2,600 families are getting poorer". In that period, Berkshire recorded a gain tied to the exit of most of its stake in the former publisher of the Washington Post.