Warren Buffett’s Berkshire Hathaway recently reported strong financial results for the first quarter of 2024. Revenue increased by 5% to $89.9 billion, driven by growth in the insurance and utilities sectors. Operating earnings before income tax rose by an impressive 31% to $12.5 billion, with insurance subsidiaries being the primary contributors.

Analyst Catherine Seifert from CFRA expects Berkshire to grow operating earnings per share at 12% annually over the next three years. This forecast, while conservative compared to the 23% annual growth seen in the past three years, still points to a promising future for the company. Berkshire’s shares currently trade at 21.7 times operating earnings, which is considered reasonable given the company’s track record and growth prospects.

The stock also trades at 1.5 times book value, a slight premium to the three-year average of 1.4 times book value.

Earnings rise driven by insurance growth

Buffett’s investing prowess has transformed Berkshire into a diversified conglomerate worth $875 billion.

Under his leadership, the company’s shares have compounded at an impressive 19.8% annually between 1965 and 2023, nearly doubling the annualized return of the S&P 500 over the same period. Berkshire’s structure and business model provide significant advantages, making it a dependable investment even in uncertain times. The company operates in three main segments: insurance, railroad, utilities, and energy, and manufacturing, service, and retailing.

This diversification, along with the recession-resistant nature of many of its subsidiaries, has enabled Berkshire to outperform the S&P 500 during bear markets. As Warren Buffett continues to commit virtually all his wealth to Berkshire Hathaway, his confidence speaks volumes about the company’s future prospects. While investors should consider the broader context and potential risks before making a decision, Berkshire remains a strong candidate for those looking to invest in a resilient and well-managed conglomerate.