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Berkshire Hathaway tells investors growth is back on track

Berkshire Hathaway tells investors growth is back on track
Berkshire Hathaway tells investors growth is back on track
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Berkshire Hathaway tells investors growth is back on track

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Berkshire Hathaway tells investors growth is back on track

Berkshire Hathaway's earnings

Revenues at Warren Buffett's investment company, are up 22%, thanks to a rebound in growth at its subsidiaries in freight rail, energy and car sales.

Berkshire Hathaway (BRK.A, BRK.B), the investment company of famed Warren Buffett, reported second-quarter 2021 earnings on Saturday, August 7.

Berkshire Hathaway shares rose about 23% at the start of 2021, beating average market trends as the S&P 500 index rose 18% over the same period.

Investors in Berkshire Hathaway, whose market valuation is approaching $700 billion, received three key signals over the past second quarter:

  • Chairman and CEO Warren Buffett has found a successor in Greg Abel, Berkshire's vice chairman, who will become the company's next chief executive after the potential retirement of Buffett, who turns 91 on 30 August.
  • A number of Berkshire subsidiaries have benefited from the post-pandemic US economic recovery, while two have posted falling revenues.
  • Wall Street analysts endorsed Berkshire Hathaway's share buyback policy the pace of buybacks was an all-time record.
  • Investors will find out details of which shares and how much Buffett's investment company bought/sold later this month in a regulatory filing.

Report figures

  • Second-quarter earnings rose 22% to $69.1 billion.
  • Earnings rose 7% to $28.1bn or $18,488 per Class A share, thanks to unrealised gains from Berkshire's $192bn investment in Apple (AAPL), Bank of America (BAC) and American Express (AXP).
  • Berkshire's cash balance was maintained at $144bn at the end of the quarter, although debts are also substantial: $113.1bn.
  • During the second quarter, the company bought back $6 billion worth of its shares, bringing the year-to-date total to $12.6 billion.

Last year, Berkshire bought its own shares for a record $24.7bn.

The analyst rated Berkshire's stock with a 'buy' rating and raised its earnings outlook for the company. Wall Street experts note that many US companies improved their results in the second quarter as the economy recovered.

Analysts at Goldman Sachs (GS) earlier this month raised their 2021 earnings forecast for Standard Poor's 500 companies, which assumes annual growth of 45%.

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