Rating Change #6

Berkshire Hathaway Inc ( 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 attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • Net operating cash flow has decreased to $5,999.00 million or 13.94% when compared to the same quarter last year. Despite a decrease in cash flow of 13.94%, BERKSHIRE HATHAWAY is in line with the industry average cash flow growth rate of -13.96%.
  • The gross profit margin for BERKSHIRE HATHAWAY is rather low; currently it is at 15.20%. 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 6.80% is in-line with the industry average.

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 15.5, above the average insurance industry P/E ratio of 15.1 and below the S&P 500 P/E ratio of 17.7. Berkshire Hathaway has a market cap of $79.36 billion and is part of the financial sector and insurance industry. Shares are down 9.2% year to date as of the close of trading on Friday.

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

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