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Berkshire Hathaway Inc Stock Downgraded (BRK.B)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

NEW YORK ( TheStreet) -- Berkshire Hathaway (NYSE: BRK.B) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for BERKSHIRE HATHAWAY is rather low; currently it is at 17.00%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, BRK.B's net profit margin of 8.10% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Insurance industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from $3,417.00 million to $3,108.00 million.

Berkshire Hathaway, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm primarily engages in the insurance and reinsurance of property and casualty risks business. Berkshire Hathaway was founded in 1889 and is based in Omaha, Nebraska. The company has a P/E ratio of 18.1, above the average insurance industry P/E ratio of 17.2 and above the S&P 500 P/E ratio of 17.7. Berkshire Hathaway has a market cap of $92.77 billion and is part of the financial sector and insurance industry. Shares are up 11.9% year to date as of the close of trading on Tuesday.

You can view the full Berkshire Hathaway Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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