Berkshire Hathaway (BRK-B) currently trades at a P/E of 11.0x, materially below its five‑year average P/E of 23.6x (a decline of 53.5% vs. its history). On an EV/EBITDA basis the stock is also cheaper than its recent past (8.4x vs a 5‑year average of 11.0x). By contrast, book‑value based valuation is roughly in line with history: P/B is 1.51x versus a 5‑year average of 1.38x (a modest premium to its own history) and below the peer median P/B of 1.63x. Relative to peers Berkshire sits at a slight discount: P/E is ~19.4% below the peer median (11.0x vs 13.6x), P/B is ~7.6% below peers, and EV/EBITDA is ~24% below peer median (8.4x vs 11.0x).
For investors this mix of signals is important. The low P/E and compressed EV/EBITDA indicate the market is either assigning a substantially lower growth/profitability outlook to Berkshire or is applying a valuation discount to the conglomerate structure (conglomerate/complexity discount). The near‑historical P/B suggests the market still places meaningful value on Berkshire’s asset base and book equity. The valuation trend is contracting, which means multiples have been moving lower; that trend raises a caution flag that expectations are being reduced and that further multiple compression could occur unless earnings or investor sentiment improves.
Key Findings
- Material discount to Berkshire’s own historical earnings multiple: P/E of 11.0x is 53.5% below the 5‑year average (23.6x), implying the market expects lower future earnings or is applying a significant valuation discount.
- Relative to peers Berkshire is priced at a slight discount across P/E, P/B and EV/EBITDA (P/E ~19.4% below, EV/EBITDA ~24% below peer medians), which could represent either opportunity or justified caution depending on earnings outlook and business mix.
- Valuation trend is contracting: declining multiples indicate market expectations have softened. Investors should confirm whether this reflects temporary earnings weakness, structural change, or persistent risk premia for conglomerates.
Company Valuation Highlights
BRK-B:
Berkshire shows a mixed valuation picture. P/E of 11.0x versus a 5‑year average of 23.6x (‑53.5%) and EV/EBITDA of 8.4x versus a 5‑year average of 11.0x point to a significant earnings‑multiple discount relative to history and a material discount to peers (P/E ~19.4% below peer median; EV/EBITDA ~24% below). P/B at 1.51x is slightly above its 5‑year average (1.38x) but slightly below the peer median (1.63x), indicating the market still ascribes value to its asset base. Actionable insight: value‑oriented investors should investigate whether the lower P/E reflects transitory earnings pressure (normalized earnings, investment income variability) or a durable re‑rating; perform a normalized earnings analysis and a DCF — if a DCF returns >15% upside (per the valuation context rule), the stock would warrant purchase consideration. Conversely, if deeper structural concerns (slowing core insurance economics, weaker investment returns, or persistent conglomerate discount) explain the multiple contraction, a more cautious stance is appropriate.
| Company |
P/E |
Hist Avg |
Fwd P/E |
PEG |
P/B |
EV/EBITDA |
P/S |
Position |
| BRK-B |
11.0x |
23.6x |
21.8x |
N/A
|
1.51x |
8.4x |
2.63x |
Above Average
|
Historical Percentile Position
Where current multiples sit relative to full historical range (higher percentile = more expensive vs history)
| Company |
P/E %ile |
P/E Range |
P/B %ile |
P/B Range |
EV/EBITDA %ile |
P/S %ile |
| BRK-B |
44th
|
6.8x - 125.2x
|
90th
|
1.25x - 1.51x
|
44th
|
90th
|
Peer Valuation Comparison
How each company's valuation compares to its industry peers
BRK-B vs 8 Peers
Slight Discount
P/E Ratio
11.0x
Peer Median: 13.6x
(-19.4%)
P/B Ratio
1.51x
Peer Median: 1.63x
(-7.6%)
EV/EBITDA
8.4x
Peer Median: 11.0x
(-24.0%)
P/S Ratio
2.63x
Peer Median: 1.39x
(+88.8%)
View all 8 peers
| Peer |
P/E |
P/B |
EV/EBITDA |
P/S |
Market Cap |
| BRK-B |
11.0x |
1.51x |
8.4x |
2.63x |
- |
| JPM |
13.9x |
2.18x |
11.3x |
2.73x |
$764.4B |
| SLF |
12.8x |
1.90x |
10.7x |
1.24x |
$47.7B |
| AIG |
13.4x |
1.01x |
6.4x |
1.55x |
$41.4B |
| BAC |
11.2x |
1.13x |
12.8x |
1.81x |
$341.2B |
| BNT |
16.2x |
0.71x |
3.0x |
1.09x |
$12.5B |
| V |
28.3x |
15.16x |
22.5x |
14.31x |
$592.2B |
| PFG |
16.1x |
1.61x |
13.2x |
1.21x |
$18.9B |
| ORI |
10.4x |
1.65x |
9.2x |
1.08x |
$9.9B |
| Peer Median |
13.6x |
1.63x |
11.0x |
1.39x |
- |
Berkshire Hathaway’s reported enterprise value is $1.07 trillion against a market capitalization of $1.04 trillion. At face value the EV exceeds the market cap by $30 billion (about 2.8% of EV), which would normally reflect the company’s net debt and other financing adjustments. Berkshire’s reported net debt is $95.8 billion (total debt $143.53B less cash $47.73B), however, and that figure equals roughly 9% of the reported EV and about 9.2% of market capitalization. The arithmetic inconsistency between EV, market cap and net debt suggests that other balance-sheet or non‑operating items (minority interests, preferred securities, large marketable investments, consolidation adjustments, or the calculation convention used) are influencing the published EV figure; this should be reconciled with the company’s footnotes before relying on EV for precise buy/sell sizing.
On valuation multiples, Berkshire’s EV/EBITDA of 8.4x and EV/Sales of 2.89x sit at levels that many investors would describe as moderate-to-attractive for a large, diversified conglomerate. Net debt/EBITDA of 0.75x signals a low leverage profile by common corporate standards and is consistent with the portfolio’s stated leverage distribution (all holdings in the ‘Low’ tier). For investors, these metrics point to a conservatively financed business that is being valued at a modest multiple of operating earnings, but the unusual EV composition warrants caution — Berkshire’s unique asset mix (large investment portfolio, insurance float and non‑operating holdings) can distort straightforward multiple comparisons and argues for supplementing EV multiples with other valuation approaches (intrinsic/DCF, price-to-book, or sum-of-the-parts).
Key Findings
- Composition mismatch: Reported EV ($1.07T) exceeds market cap ($1.04T) by ~$30B, but reported net debt is $95.8B — this mismatch indicates additional adjustments (noncontrolling interests, preferreds, large marketable investments or calculation conventions) are affecting the published EV and should be reconciled in the filings.
- Moderate valuation multiples: EV/EBITDA of 8.4x and EV/Sales of 2.89x are modest for a diversified large‑cap and imply the market is not assigning a high earnings multiple to Berkshire today; this can be attractive if earnings/EBITDA are stable, but multiples may understate value if significant investment gains or insurance float earnings are excluded from the EBITDA baseline.
- Low leverage profile: Net debt/EBITDA at 0.75x and the portfolio’s ‘Low’ leverage tier indicate balance-sheet conservatism. Low leverage improves financial flexibility and reduces downside risk, but investors should confirm whether off-balance-sheet exposures or large liquid investments materially change leverage economics.
Leverage Assessment
The portfolio-level leverage picture is conservatively positioned. Berkshire’s net debt/EBITDA of 0.75x implies ample capacity to absorb shocks, pursue acquisitions, or deploy capital into investments without creating near-term solvency risk. The Leverage Distribution (all holdings classified as ‘Low’) reinforces that the dominant risk is not financial leverage. Practical next steps for investors: (1) reconcile the EV composition in Berkshire’s notes to understand why EV minus market cap is only ~$30B despite ~$96B of net debt; (2) monitor insurance float, contingent liabilities and large marketable securities that can change the effective leverage; and (3) use complementary valuation approaches (DCF or sum-of-the-parts) because Berkshire’s complex asset mix can make single-period EV multiples misleading for investment decisions.
| Company |
Market Cap |
EV |
Net Debt |
EV/EBITDA |
Hist Avg |
EV/Sales |
EV/FCF |
Leverage |
| BRK-B |
$1.04T |
$1.07T |
$95.80B
|
8.4x |
11.0x |
2.89x |
92.4x |
Low
|
Leverage Analysis
| Company |
Net Debt/EBITDA |
Hist Avg |
Hist Range |
Debt % of EV |
Leverage Tier |
| BRK-B |
0.75x
|
1.13x |
0.11x - 3.81x
|
13.4% |
Low
|
Berkshire Hathaway (BRK‑B) shows a material gap between its current market price ($483.75) and intrinsic values produced by both DCF approaches. The DCF inputs reflect the current rate environment: a 10‑year Treasury yield of 4.28% and a BAA credit spread of 1.62% produce a dynamic equity risk premium of 3.12% (ERP = 3.0% + (1.62% - 1.5%)). That ERP, together with Berkshire’s beta (0.71) and the firm’s WACC (6.27%), embeds a higher absolute cost of capital than the low‑rate years of 2015–2020. The historical economic regime — Fed funds rising from 0.24% (2015) to 4.48% (2024), with a peak of 5.33% in 2023 — compressed valuations across the market and raised discount rates; those same forces reduce DCF values relative to the low‑rate expansion periods noted in the historical context.
Key Findings
- Dynamic inputs matter: With a 4.28% risk‑free rate, a 1.62% BAA spread and an ERP of 3.12%, Berkshire’s WACC (6.27%) is anchored higher than in the low‑rate years; higher discounting is a primary driver of the low DCF values.
- Method divergence signals growth expectation differences: Historical DCF ($250.74) uses a 10‑year FCF CAGR of -3.1% and projects weaker cash flows; Analyst DCF ($351.69) reflects forward revenue growth expectations and a recovery in FCF margins, explaining why it is ~40% higher than the Historical DCF but still well below market price.
- Both DCFs imply overvaluation: The market price of $483.75 exceeds the Analyst DCF by 27.3% and the Historical DCF by 48.2% — both beyond the >15% downside threshold used here — indicating the stock is significantly overvalued on intrinsic cash‑flow measures absent stronger future outcomes.
DCF Verdicts by Company
BRK-B:
Significantly Overvalued — Both DCF methods produce intrinsic values materially below the market price (Historical DCF $250.74, -48.2%; Analyst DCF $351.69, -27.3%). The Historical DCF is conservative, driven by a negative 10‑year FCF CAGR (-3.1%), while the Analyst DCF assumes revenue/FCF recovery. A modest 2.5% annual buyback rate has been incorporated and supports per‑share value over time (a ~2.5% repurchase rate compounds to roughly a 22% share count reduction over 10 years), but this is insufficient to bridge the current valuation gap. Actionable guidance: avoid initiating a full position at $483.75 unless you have conviction that Berkshire can materially improve FCF growth above sell‑side forecasts (driving intrinsic value toward or above the Analyst DCF), or that non‑FCF value drivers (investment portfolio mark‑to‑market appreciation, realization of embedded gains, or exceptional capital allocation) justify a durable premium. Monitor quarterly FCF trends, realized/unrealized investment returns, share‑repurchase cadence, and interest‑rate/credit‑spread movements; a price nearer $352 would align with the forward‑looking Analyst DCF, while a price near $251 would reflect the conservative Historical DCF.
Risk-Free Rate (10Y Treasury):
4.28%
Market Risk Premium:
3.12%
BAA Spread:
1.62%
Terminal Growth Rate:
Varies by sector (2.0% - 3.5%)
Methodology Note:
- Market Risk Premium: Calculated dynamically based on credit spreads.
Formula:
ERP = 3.0% + (BAA Spread - 1.5%).
When spreads are tight, ERP is lower; when spreads widen, ERP increases.
- Terminal Growth Rate: Sector-based assumptions:
Technology, Communication Services: 3.5% |
Healthcare, Consumer Cyclical: 3.0% |
Industrials, Financials, Consumer Defensive, Materials: 2.5% |
Energy, Utilities, Real Estate: 2.0%
- Shares Outstanding: Adjusted for historical buyback trends when applicable.
| Company |
Current Price |
Historical DCF |
Upside |
Analyst DCF |
Upside |
Verdict |
| BRK-B |
$483.75 |
$250.74 |
-48.2%
|
$351.69 |
-27.3%
|
Significantly Overvalued
|
BRK-B – Berkshire Hathaway Inc.
WACC Calculation
| Risk-Free Rate (Rf) |
4.28% |
| Beta (β) |
0.71 |
| Market Risk Premium |
5.50% |
| Cost of Equity (Ke = Rf + β × MRP) |
6.50% |
| Cost of Debt (after-tax) |
4.66% |
| WACC |
6.27% |
Historical Free Cash Flow
| Metric |
2020 |
2021 |
2022 |
2023 |
2024 |
| FCF ($B) |
$26.8B |
$26.1B |
$21.8B |
$29.8B |
$11.6B |
| FCF Margin (%) |
9.3% |
7.4% |
9.3% |
6.8% |
3.1% |
FCF CAGRs:
5Y: -12.5% |
10Y: -3.1%
| Avg FCF Margin (5Y): 7.2%
DCF Valuation (Two Methods)
| Component |
Historical Method
(10Y CAGR projection) |
Analyst Method
(Revenue × FCF Margin) |
| Growth Assumption |
2.5% (normalized) (10Y CAGR) |
Analyst Revenue Est. × 7.2% margin |
| PV of Projected FCF |
$94.57B |
$27.11B |
| Terminal Value |
$647.06B |
$782.67B |
| PV of Terminal Value |
$477.33B |
$736.47B |
| Enterprise Value |
$571.91B |
$763.58B |
| (-) Net Debt |
$95.80B |
$95.80B |
| Equity Value |
$476.11B |
$667.79B |
| Intrinsic Value per Share |
$250.74 |
$351.69 |
| vs Current Price ($483.75) |
-48.2%
|
-27.3%
|
Sensitivity Analysis (Historical Method)
Intrinsic value per share varying WACC and Terminal Growth Rate
| WACC ↓ / TG → |
1.5% |
2.0% |
2.5% |
3.0% |
3.5% |
| 4.3% |
$371
|
$453
|
$581
|
$807
|
$1317
|
| 5.3% |
$260
|
$300
|
$355
|
$435
|
$558
|
| 6.3% |
$195
|
$219
|
$249
|
$288
|
$341
|
| 7.3% |
$152
|
$168
|
$186
|
$209
|
$238
|
| 8.3% |
$122
|
$133
|
$146
|
$160
|
$178
|
Current price: $483.75 | Highlighted row shows base case WACC (6.27%)
Verdict:
Significantly Overvalued
(Combined upside: -37.7%, DCF Confidence: High)
DCF Summary Comparison
| Company |
Current Price |
Historical DCF |
Analyst DCF |
Combined Upside |
Verdict |
| BRK-B |
$483.75 |
$250.74
(-48.2%)
|
$351.69
(-27.3%)
|
-37.7%
|
Significantly Overvalued
|
Analyst coverage of Berkshire Hathaway (BRK‑B) is limited and cautiously negative. The two analysts in the sample set produce a consensus price target of $465.50, which is 3.8% below the current share price of $483.75 and supports a Hold sentiment. The published target range is narrow: $450.00 (‑7.0%) at the low end to $481.00 (‑0.6%) at the high end, and there is no clear directional trend in targets over the most recent reporting window (targets described as stable). Together these data points indicate modest analyst concern but limited conviction driven by light coverage.
The P/E picture is the most important signal beneath the price targets. Trailing twelve‑month (TTM) P/E is 11.7x while the forward P/E (based on the provided 2027 EPS of $22.23) is 21.8x — an 85.7% increase. Put another way, implied trailing EPS = $483.75 / 11.7 ≈ $41.36 versus the forward EPS projection of $22.23, implying analysts expect materially lower reported EPS going forward (or that TTM EPS included large, nonrecurring gains). This divergence is consistent with a story of earnings normalization rather than an unequivocal market overvaluation; investors should therefore separate recurring operating earnings from volatile investment and realized‑gain items when interpreting the multiple expansion.
Key Findings
- Analyst consensus implies limited near‑term downside: the mean target is $465.50, or ‑3.8% versus the current price; the sentiment label is Hold rather than Sell or Buy.
- P/E expansion from 11.7x (TTM) to 21.8x (Forward) is driven primarily by a projected drop in EPS (TTM implied EPS ≈ $41.36 vs forward EPS $22.23) — this points to expected earnings normalization or the removal of one‑time gains from the denominator rather than an obvious re‑rating of the share price.
- Analyst conviction is low: only two analysts cover BRK‑B. The target range ($450–$481) is relatively tight (≈6.9% span from the low to current price), which indicates agreement between those analysts but the small analyst count limits the reliability of the consensus.
Price Target Trend Analysis
Price targets are effectively stable and slightly below the market price, signaling a cautious but not bearish analyst stance. The narrow target band (low of $450 to high of $481) reflects modest dispersion in views, but with only two analysts that narrow band should not be interpreted as high conviction. For investors this means analyst targets provide a near‑term reference point but should be supplemented with company‑specific analysis (normalized earnings and a DCF) before making a position change.
P/E Trajectory Analysis
The shift from a TTM P/E of 11.7x to a forward P/E of 21.8x indicates P/E expansion driven by a much lower forward EPS estimate (from implied TTM EPS ≈ $41.36 to forward EPS $22.23). For investors this typically signals expectations of earnings normalization (removal of one‑time investment gains) rather than an intact operating earnings decline. Practically, investors should: (1) dissect trailing EPS to isolate recurring operating earnings vs volatile investment results, (2) evaluate whether forward EPS assumptions are conservative or reflect structural earnings decline, and (3) perform a DCF using normalized operating cash flows. Note: no DCF values were provided in the dataset; if a DCF showed >15% upside relative to the current price that would argue the stock is undervalued versus the analyst consensus, whereas a DCF showing >15% downside would reinforce the cautious analyst view.
Analyst Price Targets
| Company |
Current Price |
Target Consensus |
Target Low |
Target High |
Upside |
Analysts |
Sentiment |
| BRK-B |
$483.75 |
$465.50 |
$450.00 |
$481.00 |
-3.8%
|
2 |
Hold
|
Forward Estimates & P/E Comparison
Comparing trailing (TTM) vs forward P/E reveals market expectations for earnings growth
| Company |
Forward EPS |
Forward Revenue |
TTM P/E |
Forward P/E |
P/E Change |
Estimate Year |
| BRK-B |
$22.23 |
$401.09B |
11.7x |
21.8x |
+85.7%
(Earnings declining)
|
FY2027 |
Reading P/E Change: Negative change (TTM P/E > Forward P/E) suggests analysts expect earnings growth.
Positive change indicates earnings may decline. Large differences warrant investigation into the growth story.
Berkshire Hathaway (BRK-B) presents a mixed valuation picture. The simple median of six methodologies implies a fair value of $384.24, which is 20.6% below the current market price of $483.75 — the report’s consensus classification is “Overvalued.” Individual methods produce a wide spread: P/E (peer) implies $302.99 (-37.4%), P/B (peer) implies $523.66 (+8.3%), EV/EBITDA (peer) implies $610.26 (+26.2%), P/S (peer) implies $256.19 (-47.0%), DCF implies $250.74 (-48.2%), and the Wall Street analyst target is $465.50 (-3.8%).
These six methods do not converge tightly. The DCF and revenue-based (P/S) approaches produce the most pessimistic views (implied values of $250.74 and $256.19, respectively), while EV/EBITDA and P/B are on the optimistic side (implied $610.26 and $523.66). The analyst consensus ($465.50) sits near the current price, indicating that sell-side forecasts are materially less negative than the median of the model set. The full valuation range spans $250.74 to $610.26, signaling substantial model-driven uncertainty and sensitivity to the underlying assumptions (earnings conversion, free cash flow margins, balance-sheet treatment and the treatment of investment income).
Key Takeaways
- Median-implied value of $384.24 (-20.6% vs. market) suggests the market is priced above the central tendency of the six-model panel; the consensus classification here is “Overvalued.”
- Large dispersion across methods (range $250.74–$610.26, a spread of ~ $359.5) indicates high valuation uncertainty. DCF (-48.2%) and P/S (-47.0%) are the most bearish; EV/EBITDA (+26.2%) and P/B (+8.3%) are the most bullish.
- Investor conclusions should depend on which signals they prioritize: conservative cash‑flow / intrinsic‑value approaches (DCF) point to material downside, while capital-intensity and balance-sheet sensitive metrics (EV/EBITDA, P/B) allow for upside. The analyst target near current price (-3.8%) suggests the market is not far from sell‑side expectations.
Investment Implications
For Berkshire Hathaway the multi-method analysis yields a mixed-but-cautious investment view. The median implied value ($384.24) and two income/scale-based methods (P/E $302.99 and DCF $250.74) indicate meaningful downside from the current market price; if you prioritize conservative intrinsic-value measures and free-cash-flow conversion, the stock appears overvalued today. Conversely, EV/EBITDA ($610.26) and P/B ($523.66) imply the company could be fairly valued or offer upside, reflecting the importance of a strong balance sheet, recurring insurance float and investment income in valuing Berkshire.
Actionable considerations:
- Defensive/conservative investors seeking a margin of safety should wait for a price closer to the model median (~$384) or nearer the more conservative DCF/P/S signals (below $300) before initiating new positions.
- Investors who prioritize balance-sheet strength, capital allocation history and operating cash flows may view the stock as acceptable to hold at current levels but should be comfortable with valuation risk given the model dispersion; accumulation could be staged on pullbacks under the median implied value.
- Short- to medium-term market action should be monitored against catalysts that materially affect the inputs behind the wide range: realized investment returns, insurance underwriting results (float trends), interest-rate moves and any large capital deployment decisions. Given the high cross-method dispersion, position sizing should reflect greater-than-normal valuation uncertainty.
In summary, the multi-method panel does not produce a clean buy signal. The consensus midpoint implies the stock is overvalued by roughly 20%, but certain valuation lenses justify a premium. Investors should align exposure to Berkshire with which valuation framework they consider most reliable and use pullbacks toward the lower end of the implied range to improve the risk/reward profile.
Comprehensive Valuation Summary
Aggregated implied values from multiple valuation methods: P/E, P/B, EV/EBITDA, P/S (peer-based), DCF, and Analyst Targets
| Company |
Current Price |
Valuation Range |
Median Value |
Median Upside |
Methods |
Consensus |
| BRK-B |
$483.75 |
$250.74 - $610.26
|
$384.24 |
-20.6%
|
6 |
Overvalued
|
Valuation Details by Method
Implied values from each valuation methodology for individual companies
BRK-B – Berkshire Hathaway Inc.
Current: $483.75
Overvalued
| Method |
Implied Value |
Upside/Downside |
Basis |
| P/E (Peer) |
$302.99 |
-37.4%
|
Peer median P/E (13.6x) × Forward EPS ($22.23) |
| P/B (Peer) |
$523.66 |
+8.3%
|
Peer median P/B (1.63x) × Book Value per Share |
| EV/EBITDA (Peer) |
$610.26 |
+26.2%
|
Peer median EV/EBITDA (11.0x) × EBITDA - Net Debt |
| P/S (Peer) |
$256.19 |
-47.0%
|
Peer median P/S (1.39x) × Revenue per Share |
| DCF |
$250.74 |
-48.2%
|
Revenue × FCF Margin projection (normalized FCF) |
| Analyst Target |
$465.50 |
-3.8%
|
Consensus of 2 analysts |
| Median |
$384.24 |
-20.6%
|
Based on 6 methods |