Berkshire Hathaway Inc.’s BRK.B first-quarter 2017 operating earnings of $1.44 per share missed the Zacks Consensus Estimate by 15.8%. The bottom line also deteriorated 5.3% year over year.
Berkshire Hathaway's earnings decline can be attributed to lower operating earnings from Insurance Operations, and Finance & Financial products.
Revenues in the reported quarter increased 24.4% year over year to $65.2 million.
Pre-tax income of $5.7 billion declined 11.9% year over year.
Segment Results
Berkshire Hathaway’s huge and growing Insurance Operations segment has kept its underwriting profit streak alive for over 14 years. Revenues from the Insurance group surged 86.2% year over year to $22.9 billion. The segment’s net earnings attributable to Berkshire Hathaway plunged 43% year over year to $641 million in the quarter.
Railroad, Utilities and Energy operating revenues increased 8% year over year to $9.4 billion owing to higher contribution from both BNSF and Berkshire Hathaway Energy. Net earnings of $5.9 billion were up 16.7% year over year, primarily due to a 6.9% increase in earnings from the railroad business, and a 13.6% rise in earnings from the energy business.
Total revenue at Manufacturing, Service and Retailing grew 6.7% year over year to $30.2 billion. Net earnings surged 16.7% year over year to $1.4 billion in the first quarter of 2017.
Revenues at Berkshire Hathaway's Finance & Financial Products – including Clayton Homes (manufactured housing and finance), CORT Business Services (furniture rental), Marmon (rail car and other transportation equipment manufacturing, repair, and leasing), and XTRA (over-the-road trailer leasing) – increased 11.8% year over year to $1.9 billion. Net earnings attributable to Berkshire Hathaway dipped 2.6% year over year to $303 million in 2016.
Berkshire Hathaway Inc. (NYSE:BRKa) Price, Consensus and EPS Surprise
Berkshire Hathaway Inc. Price, Consensus and EPS Surprise | Berkshire Hathaway Inc. Quote
Financial Position
As of Mar 31, 2017, consolidated shareholders’ equity was $292.9 billion, up 3.5% from Dec 31, 2016. As of Mar 31, 2017, cash, cash equivalents and U.S. Treasury bills approximated $26 billion, down 7.1% from the 2016-end level. Cash from operations surged 147% year over year to $18.3 billion in 2017.
As of Mar 31, 2017, Berkshire Hathaway’s book value increased 3.5% from year-end 2016 to $118.72 per share.
The company exited the quarter with float of $105 billion.
Zacks Rank
Berkshire Hathaway carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among the other players that have reported first-quarter earnings so far, Chubb Limited (NYSE:CB) beat the Zacks Consensus Estimate but RLI Corp. (NYSE:RLI) and The Progressive Corporation (NYSE:PGR) missed expectations.
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RLI Corp. (RLI): Free Stock Analysis Report
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Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
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