Berkshire Hathaway (NYSE:BRKa) Inc.’s BRK.B third-quarter 2016 operating earnings of $1.97 per share beat the Zacks Consensus Estimate of $1.88. Earnings were up 6.5% on a year-over-year basis.
Berkshire Hathaway's earnings improvement was driven by an increase in operating earnings from Utilities and Energy, Manufacturing, Service and Retailing as well as Finance & Financial Products.
Revenues in the reported quarter inched up 0.3% year over year to $59.1 billion.
Segment Results
Berkshire Hathaway’s huge and growing Insurance Operations segment has kept its underwriting profit streak alive for over 13 years. Insurance group’s revenues grew 8.6% year over year to $11.4 billion on higher contributions from GEICO and Berkshire Hathaway Primary Group. The segment’s operating earnings before tax decreased 17.6% year over year to $1.4 billion.
Railroad, Utilities and Energy operating revenues decreased 3.7% year over year to $10.9 billion due to a decline in revenues from the railroad business. Operating earnings of $2.8 billion were down 20% year over year, primarily due to a 17.6% plunge in earnings from the railroad business, partially offset by and a 9% increase in earnings from the energy business.
Total revenue at Manufacturing, Service and Retailing grew 7.3% year over year to $30.7 billion. Higher contribution from industrial products, building products and consumer products drove the upside. Operating earnings surged 47% year over year to $2.5 billion.
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) – jumped to $4.8 billion from $0.9 billion in the year-ago quarter. Operating earnings before tax increased 6.4% year over year to $583 million.
Financial Position
Consolidated shareholders’ equity as of Sep 30, 2016 was $269.3 billion, up 5.4% from Dec 31, 2015. Consolidated cash approximated $85 billion as of Sep 30, 2016, up 18% from the 2015-end level. Cash from operations totaled $25.2 billion in the first nine months of 2016, up 4.1% year over year.
As of Sep 30, 2016, Berkshire Hathaway’s book value inched up 5.3% from year-end 2015 to $109.19 per share.
Zacks Rank
Berkshire Hathaway carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other P&C Insurers
The bottom line at The Travelers Companies, Inc. (NYSE:TRV) and AXIS Capital Holdings Limited (NYSE:AXS) beat the Zacks Consensus Estimate, while earnings of RLI Corp. (NYSE:RLI) missed the same in the third quarter.
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