- Fair Value Estimate
: $765,000 - Morningstar Rating
: ★★★ - Morningstar Economic Moat Rating
: Narrow - Morningstar Uncertainty Rating
: Low
Berkshire Hathaway BRK.A/BRK.B reported adjusted second-quarter operating results slightly better than our expectations, with the firm continuing to benefit from solid underwriting in its insurance businesses despite pricing coming down over the past year.
Why it matters: Berkshire has historically offset underperformance in one or more of its segments with outperformance in others.
- Following several years of outstanding results, the insurance operations have seen pricing come down over the past year, but with no discernible catastrophe losses in the second quarter, underwriting results were still solid.
- BNSF continues to trail Union Pacific on the profitability front, despite seeing another improvement in its operating ratio, with the gap in profitability between the two firms at just over 500 basis points on a preliminary basis in the second quarter.
- Berkshire Hathaway Energy, meanwhile, produced steady results during the second quarter, but future results could still be adversely affected by wildfire litigation and legislation that has curbed investments in renewables.
- The manufacturing, service, and retailing division generated decent revenue growth during the second quarter, aided by the closing of the OxyChem acquisition at the beginning of the year, with margins improving year over year.
Berkshire steps up stock purchases, and repurchases
- Berkshire was, for the first time in nearly three years, a net buyer of stocks during the second quarter, with sales of $3.7 billion in equity securities offset by purchases of $23.5 billion in common stock of publicly traded firms.
- From what we believe from the cost basis for the insurance stock investment portfolio, it looks like Berkshire has added $21.1 billion on a net basis to its commercial, industrial, and other holdings, which were likely made up of shares of Alphabet GOOGL (noting that Berkshire agreed to buy $5 billion of Alphabet’s Class A shares at $351.81 per share and another $5 billion of its Class C stock at $348.20 per share) and additional purchases of the Sogo Shoshas.
- As for share repurchases, the company continued buying back stock in the June quarter, having resumed its repurchase activity in the first quarter of 2026 after six straight quarters without repurchases. Berkshire acquired just over $4.5 billion in Treasury shares—buying back 478 Class A shares for $350 million and 8.6 million Class B shares for $4.2 billion—during the second quarter of 2026, bringing year-to-date share repurchases to close to $4.8 billion. This was Berkshire’s largest quarterly outlay for its own shares since the first quarter of 2023 (when the company bought back $4.5 billion of common stock), with the company paying around 1.45 times the prior quarter’s book value per share, on par with the prices paid in 2023.
The bottom line: With Berkshire’s second-quarter results coming in slightly above our expectations, we’re likely to slightly increase our $765,000 per Class A share and $510 per Class B fair value estimates.
- Excluding the impact of investment gains/losses and other adjustments, second-quarter adjusted operating revenue increased 10.0% year over year to $101.8 billion. Adjusted operating earnings rose 16.3% year over year to $13.0 billion.
- Book value per share, which serves as a decent proxy for measuring changes in Berkshire’s intrinsic value, increased 12.5% year over year to $522,396 from $464,454 at the end of June 2025.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article.
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