Property/Casualty Insurance · #71 in the Retail 100

Berkshire Hathaway Inc. Class B

BRK.B

Our rating: sellhigh conviction
12-month target: $542.68 -2.4%
Expected vs. S&P 500: -20.9 ptsSee the math
Next earnings: Nov 7In 2 days

Berkshire's insurance engine is slipping, with GEICO's underwriting profit down 45% last quarter, and analysts expect 2027 earnings to be almost flat.

Summary

Berkshire Hathaway owns GEICO and other insurers, the BNSF railroad, Berkshire Hathaway Energy and manufacturing, service and retail companies, along with a large stock portfolio and a huge pile of cash. Greg Abel, CEO since January, has started spending the cash Warren Buffett built up. But falling interest rates and weaker insurance profits are holding earnings back, and the stock is valued above its own history. It depends on Abel's buybacks and deals lifting earnings per share faster than the cash loses income.

$557.14

+$81.46 (+17.12%)Past year

What Berkshire Hathaway Inc. Class B does

Berkshire Hathaway is a holding company that owns many businesses outright, led by its insurers. Insurance customers pay premiums before claims come due, and Berkshire invests that money in stocks and bonds.³⁴

What it sells

Distribution and retail37% of revenue, FY2025
McLane stocks convenience stores, Pilot runs truck stops, plus NetJets and others. Large sales, but under 4 cents of pretax profit per dollar.
Insurance28% of revenue, FY2025
GEICO auto insurance and reinsurance for other insurers. About $176 billion of premiums awaiting claims funds Berkshire's investments.
Manufacturing21% of revenue, FY2025
Precision Castparts aircraft parts, Lubrizol chemicals, Clayton homes, Duracell batteries and more. About a quarter of operating profit.
Railroad and utilities14% of revenue, FY2025
The BNSF railroad and Berkshire Hathaway Energy's utilities and pipelines, which must keep spending heavily on track and power lines.

Who buys it

Millions of drivers insure with GEICO, the third-largest U.S. auto insurer with about 12% of the market. Walmart, 7-Eleven and Yum! Brands each buy 13% to 17% of McLane's sales. BNSF's freight trains serve mostly the western and southern U.S.

Where you've seen it

GEICO car insurance, Duracell batteries and Pilot Flying J truck stops all belong to Berkshire.

The backstory

Under Warren Buffett, Berkshire sold more stock than it bought for 13 straight quarters and bought back no shares from June 2024 through 2025. Cash piled up, reaching a record $380.2 billion net of unsettled purchases in March 2026, Greg Abel's first quarter as CEO, and it earned less as rates fell. Abel's answer is to spend it on buybacks, businesses and stocks.

How the business makes money

Why Berkshire's insurers hand it money to invest^{1,2,3,4,5,6,7,29,33}

Step 1
Insurance customers pay premiums before claims come due. Berkshire invests that money, called float, which stood at $177.5 billion at June 30.
Step 2
The insurers also profit on the policies themselves, so the float costs less than nothing. They earned $4.4 billion on policies in the first half.
Step 3
The railroad, utilities and factories add steady earnings: $12.6 billion after tax in the first half.
Step 4
Spare cash sits in Treasury bills and stocks, and earns less as rates fall. CEO Greg Abel is spending it on businesses like Taylor Morrison.
What shareholders get
Abel is also buying back stock, $4.5 billion last quarter, so each remaining share owns more of the profit.

Advantages

Free money from insurance float

Major advantage

Berkshire's biggest advantage. Its insurers made a profit on the policies themselves in the first halves of 2025 and 2026, so the float cost less than nothing to borrow.^1,2

Cash to buy when others must sell

Strong advantage

Strong in a downturn. Berkshire's buyback rule keeps at least $30 billion in cash, so it can buy when others must sell.²

A mix of businesses few can copy

Strong advantage

Hard to copy. Few rivals own a major freight railroad, regulated utilities and a large insurer together, and BNSF and the energy business earned $4.9 billion after tax in the first half.^1,2

What's changing

Abel's first year: spending the cash Buffett built up

Abel's first year is about spending the cash Buffett built up. He restarted buybacks in March, the first since May 2024. In the second quarter Berkshire ended 14 quarters of net stock selling and nearly doubled its Alphabet shares, and Taylor Morrison closed July 24. On September 18 Buffett handed the chairmanship to his son Howard and became chairman emeritus.^{1,2,3,4,7,8,29,30,31,33}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Berkshire Hathaway
Berkshire Hathawaythis stock	$1.19T	Berkshire Hathaway is a holding company that owns many businesses outright, led by its insurers. Insurance customers pay premiums before claims come due, and Berkshire invests that money in stocks and bonds.
Markel GroupMKL	$23.24B	A specialty insurer that invests its premiums in stocks and whole businesses.	Same playbook as Berkshire at far smaller size, with much less cash.
Fairfax FinancialFRFHF	$39.44B	Canadian insurer that invests premium money in stocks, bonds and whole companies.	Fairfax copies the Berkshire model on a smaller scale, without a railroad.
ProgressivePGR	$133.25B	Big U.S. auto insurer that prices policies using driving data and heavy advertising.	Progressive is all insurance, fighting GEICO; Berkshire owns GEICO among many businesses.²
Union PacificUNP	$176.46B	Freight railroad covering the western U.S., BNSF's main competitor.	Union Pacific is a pure rail bet; BNSF is 12% of Berkshire's earnings.¹

Leadership

Who runs the company, and how the stock has done under the CEO.

BRK.B +11.9%S&P 500 +10.1%Price change since Jan 2026

Greg AbelPresident and CEO10 mo, since 2026

Charles ChangSVP and CFO5 mo

Howard BuffettChairman of the Board1 mo

Ajit JainVice Chairman, Insurance Operations8.7 yrs, since 2018

When Abel was named (May 2025), the stock moved -5.1% that day; the S&P 500 moved -0.6%.

Wall Street on Abel: PositiveCFRA said the second-quarter buybacks are Abel's way of asserting himself but called GEICO's results a warning sign. Gabelli said the buybacks give it confidence in Berkshire's value.^L8

Leadership sources (8) · researched Oct 2026

L1Berkshire Hathaway Announces Leadership Appointments · Berkshire Hathaway, 2025-12-08
L2Greg Abel takes over as CEO of Berkshire Hathaway. What to know about Warren Buffett's successor. · CBS News, 2026-01-01
L3Who is Greg Abel, Warren Buffett's choice to replace him as CEO of Berkshire Hathaway? · CBS News, 2025-05-03
L4Warren E. Buffett Becomes Chairman Emeritus, Remains Director; Howard G. Buffett Elected Chairman · Berkshire Hathaway, 2026-09-18
L5Warren Buffett stepping aside as Berkshire Hathaway chairman · CBS News, 2026-09-18
L6Buffett successors Abel, Jain get Berkshire board seats · Fox Business, 2018-01-10
L7Crowd shrinks as Berkshire Hathaway's new CEO leads the annual meeting for the first time Saturday · Associated Press / WTOP, 2026-05-02
L8Berkshire Hathaway accelerates buybacks and cuts cash holdings as profit beats forecasts · Reuters / Idaho Business Review, 2026-08-10

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Can Abel's buybacks and acquisitions lift 2027 operating earnings per Class B share clearly above the $21.64 analysts expect, as falling interest rates shrink what the cash earns?^{1,2,3,4,9,10,14,15,16,17,18,19,20,21,22,23,24,25,26,27,28,29}

Bull case: why buyers buy

If Abel keeps buying back stock and buying businesses, each share owns more earnings and business growth outruns the lost interest income.

Abel is buying back stock again. Berkshire bought back $4.5 billion in the second quarter and $3.3 billion more in July.
The owned businesses are growing fast. Manufacturing, service and retail earnings rose 24% last quarter, and energy rose 27%.
Reported earnings leave out stock gains. Those were $11.4 billion after tax in the first half, and Berkshire bought a net $19.8 billion of stocks in the second quarter.
Deals are swapping Treasury bill interest for business earnings. Abel's $6.8 billion Taylor Morrison deal closed in July, and OxyChem, agreed under Buffett, closed in January but started weakly.

Bear case: why sellers sell

If rates keep falling and GEICO's profits keep shrinking, earnings per share barely grow, and a stock priced above its own history drifts lower.

Lower rates mean less interest on the cash. Insurance investment income fell 9% in the second quarter.
GEICO is earning less on its policies. Claims came more often and cost more, while advertising and commissions rose.
Analysts expect earnings to stall. Their 2027 forecast of $21.64 per Class B share is barely above the $21.47 they expect for 2026.
The stock is priced above its own history. At about 23 times expected operating earnings, it sits above 14 of 16 quarter-end readings from 2021 to 2025.

Where Delphi landssellWe think the bear case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Operating earnings per Class B share▲ improving

$6.03 last quarter, up from $5.17 a year ago^1,25,27

Leaves out stock-market swings, so it shows whether the businesses and Abel's spending grow profit per share.

Insurance operating earnings▼ worsening

$4.79 billion after tax last quarter, down 11%, with GEICO's underwriting profit down 45%^1,2,3

The biggest earner, from policies and investments, and where lower rates and GEICO's rising costs show up.

Manufacturing, service and retail operating earnings▲ improving

$4.47 billion last quarter, up 24%^1,2

The second-largest earner, and where deals like OxyChem and Taylor Morrison show up.

Next earnings report

Nov 7

In 2 days

Expected earnings per share: —
Expected revenue: —

What to listen for: How much stock Abel bought back in the third quarter, and whether GEICO's profit from writing policies stopped falling.^9,13

What would prove this wrong

✕Abel stops buying back shares while the stock stays near today's price.
✕GEICO's underwriting profit keeps falling as claims costs rise.
✕A large acquisition earns less than the Treasury bills it replaces.
✕Interest rates fall further, cutting income on the cash pile.

Our ratingSellHigh convictionas of Nov 2 close, $556.11 · what ratings mean

The stock trades at about 23 times expected operating earnings, above its five-year norm of 19, while analysts expect under 1% growth, so it should trail the S&P 500.

12-month target: $542.68 (-2.4%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -20.9 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $556.11

Target $542.68

bull case25% likely

$668.10 +20%

Buybacks and new businesses outrun lower interest income, and investors pay a premium for Abel's spending.

$22.57 earnings per share × 29.6 = $668.10

base case50% likely

$524.86 -6%

Acquisitions and buybacks roughly offset lower interest income and GEICO's weaker profit, so operating earnings land near analyst forecasts.

$21.77 earnings per share × 24.1 = $524.86

bear case25% likely

$452.89 -19%

Lower rates and weaker GEICO results pull operating earnings down, Abel slows buybacks, and the valuation falls toward its history.

$20.95 earnings per share × 21.6 = $452.89

Why these odds: Analysts raised 2027 estimates three times in the past 30 days and cut none, and Berkshire beat estimates in three of the last four quarters.

How the prices are built: Wall Street expects earnings per share of $21.77 for the year starting a year from now (analysts range from $20.12 to $23.36). Today the stock trades at 25.7 times next year's earnings per share; its five-year middle is 19.2.^{1,2,9,10,12,13,14,15,16,17,18,19,20,21,22,23,24,25,26,27,28,32}

What tests the call: Third-quarter 2026 results: buybacks, GEICO profit and cash (Nov 2)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 5; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $556.11, investors pay 38% more than they pay for the average stock's earnings

Berkshire Hathaway Inc. Class B trades at 26 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 19.

Analysts expect earnings to grow about 1% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. Berkshire Hathaway Inc. Class B's earnings are expected to grow slower than the market's, so the premium has to rest on something other than growth, such as how dependable those earnings are.

Berkshire Hathaway Inc. Class B multiple: 26×
S&P 500 multiple: 19×
Base case: −6%
Bear case: −19%

Last earnings

Q2 2026 results, reported Aug 8

Operating earnings rose 16% to $12.98 billion, or about 5% without currency swings on foreign debt, and Abel stepped up buybacks to $4.5 billion.^1,2,3,4,9,11

Reported Aug 8	Expected	Actual	Difference
Earnings per share	$5.13	$6.02	+17.3%
Revenue	—	—	—

Beat expectations in 2 of the last 6 quarters

Stock reaction: +1.5% on Monday, August 10, the next trading day

Why the stock moved

Up: operating earnings per Class B share of $6.03 beat the $5.13 consensus by 17%.
Up: buybacks rose to $4.5 billion from $235 million in the first quarter, plus $3.3 billion more in July.
Held back: GEICO's pre-tax underwriting profit fell 45% as claims and advertising costs rose.
Held back: insurance investment income fell 9% because lower interest rates cut what the cash earns.

What it means for the stock: Strengthened it: Abel showed he will spend the cash on buybacks and businesses. But GEICO and lower interest income show earnings growth will not come easily.