Berkshire Hathaway saw a significant surge in operating earnings, reporting a first-quarter profit of $11.22 billion, which is a 39% increase from the previous year. This increase was primarily driven by the rise in insurance underwriting earnings.
Another key highlight of the earnings report was Berkshire’s record cash hoard, which reached $188.99 billion in the first quarter. This increase in cash reserves was attributed to the holding company’s inability to find suitable acquisition targets in recent years.
Insurance Business Strength
The insurance business, especially Geico, played a vital role in boosting Berkshire’s earnings. Geico’s earnings saw a 174% increase to $1.928 billion, contributing significantly to the overall growth in insurance underwriting earnings. This surge in earnings is reflective of the industry’s overall stronger demand and increased pricing power.
Market Performance
Berkshire Hathaway shares saw a positive response from the market, with Class A shares reaching an all-time high of $634,440 in March. Class B shares also performed well, reaching a price of about $402.60 per share. Despite this impressive performance, some analysts believe that the stock price is already fairly priced.
While some analysts like UBS’s Brian Meredith have a buy rating on Berkshire Hathaway, others like Edward Jones’ James Shanahan have a hold rating due to concerns about the stock being fairly priced. Meredith, in particular, raised his price target for Berkshire shares based on the positive earnings beat and Geico’s progress in data analytics.
Berkshire Hathaway’s latest earnings report highlights the company’s strong performance in the first quarter, driven by the robust earnings in its insurance business and the record cash hoard. Despite the positive market response and analysts’ bullish outlook, there are concerns about the stock being fairly priced. It will be interesting to see how Berkshire Hathaway continues to navigate the current market landscape and capitalize on its strengths in the coming quarters.