Berkshire Hathaway B (BRK.B) Expected to Beat Earnings Estimates: Should You Buy?

Radarpedia – Berkshire Hathaway B (BRK.B) Expected to Beat Earnings Estimates: Should You Buy? When Berkshire Hathaway B (BRK.B) posts its results for the quarter ending September 2024, the market expects it to show lower earnings compared to the same time last year, even though it will report higher revenues. This well-known consensus view is useful for figuring out how the company’s earnings will be, but how the actual results relate to these predictions could have a big effect on its stock price in the near future.

If these key numbers beat estimates in the next earnings report, the stock might go up. In the event that they fail, the stock may go down.

While the immediate price change and future earnings expectations will mostly rest on what management says about business conditions on the earnings call, it’s still a good idea to guess how likely it is that EPS will surprise positively.

Zacks Consensus Estimate

This company is expected to post quarterly earnings of $4.81 per share in its upcoming report, which represents a year-over-year change of -3%.

Revenues are expected to be $96.62 billion, up 3.7% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Earnings Whisper

Changes to estimates made before a company reports its earnings can give you an idea of how business was during the time whose results are being reported. This idea is at the heart of our own surprise prediction model, the Zacks Earnings ESP (Expected Surprise Prediction).

This report compares the Zacks Consensus forecast to the Most Accurate Estimate for the quarter. The Most Accurate Estimate is a more up-to-date version of the Zacks Consensus EPS forecast. The idea behind this is that when analysts change their estimates right before results are released, they have the most up-to-date information, which could make their new estimates more accurate than what they and other analysts who contributed to the consensus had predicted earlier.

In theory, a positive or negative Earnings ESP reading shows how far the real earnings are likely to be from the consensus estimate. The model can only make good predictions, though, when the ESP score is positive.

If the Earnings ESP is positive and the Zacks Rank is #1 (Strong Buy), 2 (Buy), or 3 (Hold), it’s likely that the earnings will be better than expected. According to our study, stocks with this combination produce a positive surprise almost 70% of the time. Also, Earnings ESP is more accurate when the Zacks Rank is high.

An profits ESP reading of -0.1 does not necessarily mean that profits will miss. Our research shows that it is hard to be sure that a stock will beat earnings if its Earnings ESP reading is negative and its Zacks Rank is 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Berkshire Hathaway B?

For Berkshire Hathaway B, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company’s earnings prospects. This has resulted in an Earnings ESP of +8.11%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination indicates that Berkshire Hathaway B will most likely beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it’s worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Berkshire Hathaway B would post earnings of $4.83 per share when it actually produced earnings of $5.38, delivering a surprise of +11.39%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it’s worth checking a company’s Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

Berkshire Hathaway B appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Expected Results of an Industry Player

Among the stocks in the Zacks Insurance – Property and Casualty industry, Axis Capital (AXS) is soon expected to post earnings of $2.50 per share for the quarter ended September 2024. This estimate indicates a year-over-year change of +6.8%. This quarter’s revenue is expected to be $1.57 billion, up 5.8% from the year-ago quarter.

The consensus EPS estimate for Axis Capital has been revised 0.1% lower over the last 30 days to the current level. However, a higher Most Accurate Estimate has resulted in an Earnings ESP of 2.87%.

When combined with a Zacks Rank of #3 (Hold), this Earnings ESP indicates that Axis Capital will most likely beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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