Berkshire Hathaway (BRK.B): Is the Stock’s Current Valuation Justified After Strong Recent Gains?

Berkshire Hathaway (BRK.B) continues to capture investor attention as it navigates changing economic conditions and shifting market sentiment. With its unique portfolio and consistent performance, the stock remains a reference point for those tracking long-term wealth builders.

See our latest analysis for Berkshire Hathaway.

Berkshire Hathaway’s share price has gained 10.6% year-to-date, with momentum building on a 7.2% gain over the last quarter and a 1.2% move higher most recently. Over the long term, shareholders have seen a remarkable 119.4% total return over five years, reflecting durable compounding and steady confidence through evolving market cycles.

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With double-digit gains and a track record of resilience, the big question now is whether Berkshire Hathaway’s stock still trades at an attractive valuation or if the market is already pricing in its long-term growth story.

Price-to-Earnings of 16x: Is it justified?

Berkshire Hathaway’s price-to-earnings (P/E) ratio sits at 16x, notably above the US Diversified Financials industry average of 13.1x. This makes its shares appear expensive compared to sector peers at the most recent closing price of $499.06.

The P/E ratio tells us how much investors are willing to pay per dollar of current earnings, serving as a benchmark for growth expectations and overall market sentiment. For a holding company like Berkshire Hathaway, rich with operating subsidiaries and investments, the P/E ratio often reflects more than core profit. It also signals investor confidence in future compounding and capital allocation prowess.

Despite its premium, Berkshire’s P/E is still well below the broader peer group average of 27x. This suggests that while the market prices in Berkshire’s proven track record, it does so with more restraint than other large-cap conglomerates. The P/E is also close to the estimated fair value ratio of 17x, reinforcing that while Berkshire trades at a slight premium, it is not out of line with valuations justified by fundamentals.

Explore the SWS fair ratio for Berkshire Hathaway

Result: Price-to-Earnings of 16x (OVERVALUED)

However, slower annual revenue growth and a recent decline in net income highlight risks that could challenge Berkshire Hathaway’s valuation premium in the future.

Find out about the key risks to this Berkshire Hathaway narrative.

Another View: Discounted Cash Flow Suggests Undervaluation

While Berkshire Hathaway appears overvalued based on its price-to-earnings ratio, our DCF model provides a contrasting perspective. The SWS DCF model estimates the shares are trading 34.5% below fair value, implying the market may not fully appreciate Berkshire’s long-term cash generation.

Story Continues

Look into how the SWS DCF model arrives at its fair value.BRK.B Discounted Cash Flow as at Nov 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Berkshire Hathaway for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 870 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Berkshire Hathaway Narrative

If you’d rather follow your own trail or reach a different conclusion, you can dive into the numbers and shape your own thesis in just a few minutes, all at your own pace. Do it your way

A great starting point for your Berkshire Hathaway research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include BRK-B.

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