Berkshire Hathaway (BRK.B) Q1 Earnings: What's In The Cards?

Berkshire Hathaway Inc. BRK.B is expected to report first-quarter 2017 results on May 5, after the market closes. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Berkshire Hathaway is likely to report top-line growth in the first quarter on improved performance across Manufacturing, Service & Retailing as well as Finance & Financial Products businesses. Also, sustained revenue growth from Burlington Northern SantaFe Corp. (BNSF) is expected to contribute to top-line growth.

Further, the company expects the Insurance Operations segment to witness a rise in underwriting profit in the first quarter, continuing its impressive track record.

Moreover, strategic acquisitions are likely to have boosted the company’s operational performance.

However, the property and casualty (P&C) insurer is expected to have experienced higher expenses due to railroad operations. This is likely to restrict margin expansion.

With respect to the surprise trend, the company has a decent earnings surprise history.

Earnings Whispers

Our proven model does not conclusively show that Berkshire Hathaway is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Berkshire Hathaway has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.71. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Berkshire Hathaway carries a Zacks Rank #4 (Sell). Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

ARES MANAGEMENT LP (NYSE:ARES) , which is set to report first-quarter earnings on May 8, has an Earnings ESP of +2.56% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Banco de Chile (NYSE:BCH) has an Earnings ESP of +0.74% and a Zacks Rank #2. The company is expected to report first-quarter earnings on May 8.

The RMR Group Inc. (NASDAQ:RMR) has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is slated to report first-quarter earnings on May 10.

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