On Aug 8, shares of Berkshire Hathaway Inc. (BRK.B) hit a 52-week high of $130.95, with 3.76 million shares traded during the course of the day. Shares gained after the company reported year-over-year earnings growth and met analysts’ estimates.
Since its earnings release on Aug 1, the stock has gained 4% compared with 0.3% gain for the S&P 500 over the same time period.
Berkshire Hathaway’s reported second-quarter operating earnings of $1.75 per share compared with $1.59 reported in the year-ago quarter. Earnings were in line with the Zacks Consensus Estimate.
Total revenue came in at $49.8 billion, up 11.3% year over year. The increase was driven by higher contribution from Insurance, Railroad, Utilities and Energy; Manufacturing, Service and Retailing as well as Finance and Financial Products segments.
During the quarter, Berkshire Hathaway revealed a cash hoard of more than $55 billion. This left the followers of the stock to ponder over the next acquisition target of CEO and chairman Warren Buffett, primarily responsible for making the company’s investments.
Berkshire Hathaway derives organic growth from its profitable Insurance, Railroads, Utilities and Energy businesses. However, it is well known for its inorganic growth which comes from several acquisitions, small and large, made by the company since inception.
In recent months, Berkshire Hathaway acquired NV Energy, Inc. for a cash consideration of approximately $5.6 billion, in Dec 2013. In Jan 2014, the company acquired the beverage dispensing equipment manufacturing and merchandising operations of British engineering company, IMI plc for approximately $1.12 billion. In June, the company acquired WPLG, Inc. for $1.13 billion.
Analysts’ optimism over the stock is also evident from an upswing in earnings estimates since the earnings release. Over the past 7 days, the Zacks Consensus Estimate for 2014 moved up 1.9% to $6.85.
Berkshire Hathaway carries a Zacks Rank #2 (Buy). Other stocks worth considering in a similar space include Endurance Specialty Holdings Ltd. (ENH), Global Indemnity plc (GBLI) and Greenlight Capital Re, Ltd. (GLRE). All these stocks carry a Zacks Rank #1 (Strong Buy).
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