Berkshire Hathaway (BRK.B) Trades Below Fair Value, Is It A Bargain?

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Berkshire Hathaway (BRK.B) Trades Below Fair Value, Is It A Bargain? Simply Wall St Thu, September 24, 2026 at 1:15 AM EDT 4 min read BRK-B Recent move in Berkshire Hathaway stock Berkshire Hathaway (BRK.B) has attracted fresh attention after a recent share price move, with investors weighing its diversified operations in insurance, rail, utilities, manufacturing, and retail in relation to its latest financial profile. The stock last closed at US$507.17, with the business reporting annual revenue of US$384.7b and net income of US$85.8b. These figures provide a reference point for how the market currently values the conglomerate. Recent trading has been mixed for Berkshire Hathaway, with a 0.73% 1-day share price return coming after a 7-day share price decline of 2.43%. However, the 3-year total shareholder return of 41.75% and 5-year total shareholder return of 82.90% point to much stronger longer-term momentum. Compare how Berkshire Hathaway stacks up against other broad, diversified giants by running the hand picked list of solid balance sheet and fundamentals (23 results) Berkshire Hathaway now trades at a modest discount to both analyst targets and some intrinsic value estimates after a softer short term run. Is that a cautious market rightly reading the risks, or a mispriced opportunity on a diversified giant? Berkshire Hathaway now sits on a P/E of 12.7x against a last close of $507.17, with several valuation checks suggesting the stock may be pricing earnings conservatively compared to both its own fair ratio and sector peers. The P/E ratio compares what investors are willing to pay today for each dollar of current earnings. For a diversified group like Berkshire Hathaway, with insurance, rail, utilities, manufacturing and retail all feeding into the bottom line, this single multiple becomes a quick shorthand for how the market views the durability and quality of those profits. Current signals point to that 12.7x P/E being on the low side. Internal fair value work indicates a fair P/E closer to 16.2x. This implies the market is assigning a discount to earnings that the fair ratio suggests could narrow over time. The stock is also flagged as trading at good value compared to peers and the wider diversified financial industry, which ties in with the view that the present multiple may understate the earnings profile of the group. Compared with the US diversified financial industry average P/E of 17x, Berkshire Hathaway trades meaningfully cheaper. It is also marked as good value versus the peer average P/E of 22.5x. This gap reinforces the idea that investors are paying a much lower multiple for each dollar of Berkshire Hathaway earnings than for many comparable businesses. Explore the SWS fair ratio for Berkshire Hathaway. Result: Price-to-Earnings of 12.7x (UNDERVALUED) Still, Berkshire Hathaway carries real pressure points, including annual net income that declined 7.23% and a broad mix of cyclical manufacturing and retail operations. Find out about the key risks to this Berkshire Hathaway narrative . The earlier 12.7x P/E check portrays Berkshire Hathaway as modestly priced against earnings. A different lens, our DCF model, points to something starker, with an estimate of future cash flow value around $787.86 per share versus the current $507.17. This implies a wide valuation gap that investors need to interpret for themselves. The question is whether the cash flow assumptions that get you from $507.17 to $787.86 feel realistic enough for you to rely on, or whether the simpler earnings multiple leaves you more comfortable. Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out Berkshire Hathaway for example ). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 30 high quality undervalued stocks . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Mixed signals around Berkshire Hathaway do not have to leave you stuck on the sidelines, especially when both pressure points and bright spots are already on the table. Take a few minutes to examine the numbers, weigh the cash flow work against the earnings multiples, and then pressure test that view against the 3 key rewards and 1 important warning sign If Berkshire Hathaway has sharpened your focus on quality and value, do not stop here. The next step is to scan wider and spot what others might be overlooking before it moves. Target quality at a discount by tracking companies flagged on the 30 high quality undervalued stocks that combine appealing valuations with stronger fundamentals. Build a steadier income stream by reviewing the 7 dividend fortresses and focusing on businesses offering higher yields with robust payout support. Reduce portfolio stress by focusing on resilience first using the 31 resilient stocks with low risk scores to filter for stocks with stronger balance sheets and lower overall risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BRK-B . Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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