Berkshire Hathaway Stock Hits New High, Nears $1 Trillion Market Value
Berkshire Hathaway
stock is bucking the drop in the equity market, notching a gain that puts the company within 5% of achieving a historic $1 trillion market capitalization.
Berkshire’s Class A stock was up 1.1% to $667,601 Wednesday after hitting a record high of nearly $670,000 earlier in the session. Berkshire’s Class B stock was 1.2% higher at $444.28, while the
S&P 500
index was down 1.4%.
Berkshire’s market value now is about $960 billion, Barron’s calculates. We estimate that the Class A stock would need to hit around $696,000 to send the market value to $1 trillion. That is 4% above the current price.
There would be roughly 1.437 million shares outstanding if the Class B shares were converted to an equivalent amount of Class A stock.
Berkshire stock has been strong this month, gaining about 9% as both value stocks and financials have done well. Berkshire is the largest component of both the Russell 1000 value index and the S&P 500 financial sector.
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The stock has pulled ahead of the S&P 500 so far this year with a 23% gain, against an 18% total return for the index. It is also ahead of the index over the past decade with a 13.4% annualized return, compared with 13.1% for the S&P 500.
Berkshire stock now is valued at about 1.5 times Barron’s estimate of its current book value of $435,000 per Class A share. It sells for about 23 times estimated 2024 earnings.
Using a so-called look-through approach, which includes the profits of the companies in Berkshire’s $400 billion equity portfolio, the price/earnings ratio would be closer to 18 or 19. As required by accounting rules, Berkshire’s reported earnings largely only reflect dividends on those stocks.
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Berkshire’s Class A stock is up from a price of around $20 since CEO Warren Buffett took control of the company in 1965. There have been no stock splits along the way. Berkshire was worth around $30 million at the time.
Buffett’s 15% stake in the company is worth about $139 billion.
It is possible that Berkshire will hit a market value of $1 trillion by August, when Buffett turns 94 after steering the company for nearly 60 years. It would be a great birthday present.
Write to Andrew Bary at andrew.bary@barrons.com
This article was originally published by a www.barrons.com
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