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What Awaits Berkshire Hathaway (BRK.B) This Earnings Season?

Zacks Equity Research

Berkshire Hathaway Inc. BRK.B delivered positive surprise in the last four reported quarters. The Zacks Consensus Estimate for the first quarter of 2019 is pegged at $2.39 per share, indicating an increase of 11.9% from the year-ago reported figure.

Let’s see what is in store for the company in the soon-to-be reported quarter.

Berkshire Hathaway’s first-quarter results are likely to benefit from improved performances across segments.

Better pricing, compelling product portfolio, prudent underwriting and increase in policy writing is expected to drive premiums in the quarter.

The insurance operations are likely to benefit from a benign catastrophe environment. The company is the second largest property and casualty insurance company in terms of premium volumes.

Berkshire Hathaway’s economically sensitive non-insurance businesses — utilities and energy plus manufacturing, service and retail — are expected to deliver improved numbers in the quarter to be reported.

Increased unit volume is expected to support results at Burlington Northern SantaFe Corp.

Berkshire Hathaway’s Finance and Financial Products segment units — CORT (furniture) and XTRA (semi-trailers) — are industry leaders. These has been witnessing a considerable improvement in earnings with recovery in the soft housing market. Given an improving macro backdrop, these units are likely to deliver better results.

Strategic acquisitions should also support the company’s results.

However, expenses are likely to hamper margin expansion.

What Our Quantitative Model Predicts

Our proven model does not conclusively show that Berkshire Hathaway is likely to beat estimates this earnings season. This is because a stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you can see below:

Earnings ESP: Berkshire Hathaway has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at $2.39. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Berkshire Hathaway Inc. Price and EPS Surprise

 

Berkshire Hathaway Inc. Price and EPS Surprise | Berkshire Hathaway Inc. Quote

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Zacks Rank: Berkshire Hathaway carries a Zacks Rank #4 (Sell).  We caution against Zacks Rank #4 or #5 (Strong Sell) stocks going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:

Everest Re Group, Ltd. RE is set to report first-quarter earnings on May 6. The company has an Earnings ESP of +3.27% and a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +3.29% and a Zacks Rank of 2. The company is slated to announce first-quarter earnings on May 7.

Cigna Corporation CI has an Earnings ESP of +5.14% and a Zacks Rank of 2. The company is scheduled to release first-quarter earnings on May 2.

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Cigna Corporation (CI) : Free Stock Analysis Report
 
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
 
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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
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