03/26/09 - 09:18 AM EDT
Richard Widows 
Before Standard & Poor's lowered its credit outlook on Warren Buffett's Berkshire Hathaway(BRKA Quote - Cramer on BRKA - Stock Picks), TheStreet.com Ratings recommended that investors "hold" the stock despite analysts' predictions of an earnings rebound.
Analysts expect Berkshire's profit to rise 75% this year from dismal levels in 2008. Per-share earnings at the investment company led by the legendary billionaire had climbed steadily in recent years, hitting $8,547 in 2007. But last year, earnings sank by 62% to $3,224 on falling revenue. Analysts forecast $5,562 a share in profit this year, followed by a 14% increase to $6,450 next year.
S&P revised its ratings outlook for Berkshire to "negative" from "stable," citing diminished capital in its insurance operations caused by stock-market declines. Berkshire's class A shares have fallen about 8% this year, trading between $85,000 and $90,000.
TheStreet.com Ratings' evaluation model analyzes a company's stock value, financial data (based on Generally Accepted Accounting Principles) and expected earnings growth based on analysts' estimates. The "performance rating" suggests a stock's return potential while the "risk rating" reflects its price volatility. High grades in those categories result in strong "overall ratings." Grades for most companies range from A-plus to E-minus, with bankrupt firms assigned marks of F.
Keep Berkshire Hathaway on 'Hold' |
| Company | BERKSHIRE HATHAWAY | BERKSHIRE HATHAWAY |
| Ticker | BRK.A | BRK.B |
| Industry | Insurance | Insurance |
| TheStreet.com Ratings Reward Grade | C | C |
| TheStreet.com Ratings Risk Grade | C- | C- |
| TheStreet.com Ratings Overall Grade | C | C |
| TheStreet.com Ratings Recommendation | Hold | Hold |
| Recent Price | 84,574.00 | 2,753.00 |
| Latest Fisc. Yr. Revenue ($Mil.) | 106,483.0 | na |
| Market Cap ($Mil.) | 130,086.0 | na |
| Total Assets ($Mil.) | 267,399.0 | na |
| Total Debt ($Mil.) | 36,882.0 | na |
| Earnings Before Interest & Taxes ($Mil.) | 8,234.0 | na |
| Cash Flow from Operations ($Mil.) | 11,252.0 | na |
| EPS - Latest Avail. Fiscal Yr. | 3,224.00 | na |
| EPS - Curr. Year Consensus | 5,652.00 | na |
| EPS - Next Yr. Consensus | 6,450.00 | na |
| Price/Book Ratio | 1.2x | na |
| Ret'n on Equity (%) | 4.6 | na |
| P/E - Current Year | 15.0x | na |
| P/E - Next Year | 13.1x | na |
| Dividend Yield (%) | 0.00 | na |
For an explanation of our ratings, click here.
Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
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