Discover the Reasons Why Berkshire Hathaway (NYSE:BRK.A) Could Be Worthy of Your Attention Today

Frequently, novice investors are enticed to purchase stocks from businesses that present a compelling narrative, despite their lack of profitability. Companies operating at a loss are constantly battling against the time to achieve financial stability, and thus, investors in these entities may be shouldering unnecessary risks.

However, if the concept of high risk and potential high reward does not resonate with your investing principles, you might want to consider investing in profitable, thriving companies such as Berkshire Hathaway (NYSE:BRK.A). Although it does not ascertain its undervaluation, the company’s profitability is enough to warrant some consideration, particularly if it continues to expand.

What Is the Rate of Berkshire Hathaway’s Earnings Per Share Growth?

Typically, the stock prices of companies reporting growth in earnings per share (EPS) follow similar upward trends. This makes EPS growth a significant indicator for long-term successful investors. Over the past three years, Berkshire Hathaway has reported annual EPS growth of around 9.7%. If sustained, this growth rate is quite satisfactory.

An evaluation of the growth of revenue and earnings before interest and taxation (EBIT) margins helps to understand the sustainability of recent profit growth. While Berkshire Hathaway’s operational revenue in the last twelve months was lower than its total revenue, it may affect our analysis of their profit margins. However, the positives are that Berkshire Hathaway’s revenues are on an upward curve and its EBIT margins have improved by 9.0 percentage points to 37%, in the past year.

NYSE:BRK.A Earnings and Revenue History as of November 27th, 2024

As an investor, the goal is to identify businesses that will flourish in the future, not just those that have performed well in the past. Although predicting the future is impossible, we offer a free visualization of analyst forecasts for Berkshire Hathaway’s future EPS.

Does Berkshire Hathaway’s Insider Ownership Align with All Shareholders?

It’s uncommon for insiders to hold a significant percentage of a trillion-dollar company like Berkshire Hathaway. However, it is reassuring to note that they have made investments in the company. Insiders hold an impressive 15% stake in the company, worth US$152b. This makes them influential shareholders and indicates their interests are well-aligned with those of other shareholders.

Considering the CEO’s pay, it appears reasonable. For firms with a market capitalisation exceeding US$8.0b, like Berkshire Hathaway, the median CEO pay is approximately US$13m.

Berkshire Hathaway’s CEO received total compensation of just US$414k in the year up to December 2023. This is significantly below average, suggesting a shareholder-friendly remuneration culture. While CEO compensation isn’t the most vital facet of a company, it instils confidence in leadership when the pay is modest.

Should You Keep an Eye on Berkshire Hathaway?

There are several encouraging aspects of Berkshire Hathaway, such as its profit growth and EPS growth. But the bonuses for shareholders don’t end there. With substantial insider investments in the company and reasonable CEO compensation, this stock is worth considering. However, bear in mind that our investment analysis of Berkshire Hathaway reveals 2 warning signs, one of which may be a cause for concern.

Investors who prefer to avoid stocks with stagnant earnings and lack of insider buying may find these key metrics valuable. Here is a refined selection of US companies exhibiting strong growth prospects and insider confidence.