Berkshire Hathaway Inc. (Class B)
Warren Buffett Score Analysis
6 of 8 Buffett criteria met · Strong Buy · Data as of June 2026
8.8
/ 10
Key Financial Metrics
P/E Ratio
20.6×
Trailing 12M
ROE
13.1%
Return on Equity
Debt / Equity
0.25×
Lower is safer
Net Margin
13.4%
Profitability
Rev. Growth (5yr)
6.8%
CAGR
FCF
$35B
Annual free cash flow
Buffett Criteria Checklist
Eight criteria Warren Buffett consistently applies. Each criterion is scored; the total drives the Buffett Score above.
Consistent Earnings Growth
Pass60+ years of positive operating earnings under the same management.
60+ year track record
Return on Equity (ROE)
WatchROE ~13% is slightly below Buffett's 15% threshold, reflecting scale.
13.1% TTM
Debt / Equity Ratio
PassD/E of 0.25 is conservative — exactly what Buffett preaches.
0.25×
Net Profit Margin
Pass13%+ operating margin across a diversified insurance and industrial portfolio.
13.4%
Revenue Growth (5-Year CAGR)
WatchSteady 7% growth — not flashy, but compounding reliably at scale.
6.8% CAGR
Valuation (P/E vs. Intrinsic Value)
PassP/E of ~20× is reasonable for the quality and diversification on offer.
20.6× TTM P/E
Durable Competitive Moat
PassInsurance float, 65+ wholly-owned businesses, $150B+ cash war chest.
Capital allocation moat
Free Cash Flow Generation
PassInsurance premiums + dividends from holdings yield $30B+ annually.
~$35B annual FCF
Score Breakdown
8.8 / 10.0 pts
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Competitive Moat Analysis
Berkshire's moat is structural. Its insurance subsidiaries (GEICO, Berkshire Re, General Re) generate float — premium cash held before claims are paid. Buffett has deployed this float into equity holdings (AAPL, AXP, KO, BAC) and wholly-owned businesses (BNSF, Berkshire Energy, See's Candies) at a rate of return the open market can't replicate. The combination of low-cost permanent capital, a $150B+ cash reserve, and a reputation that lets Berkshire close deals others can't (Goldman Sachs crisis warrants, Occidental Petroleum) is a moat with no direct competitor.
Sector & Macro Context (2026)
In 2026 Berkshire's massive cash pile ($189B at year-end 2025) is finally earning meaningful returns at 5% short-term rates. Rising rates boosted insurance underwriting margins — GEICO returned to profitability after two years of restructuring. BNSF (railroad) faces trucking competition but benefits from long-haul bulk goods that have no road substitute. Berkshire Hathaway Energy is navigating the renewable transition at scale. Succession from Buffett to Greg Abel remains a key long-term overhang, though the board transition has been managed carefully.
Investment Thesis
Berkshire is the purest expression of Buffett's investing philosophy — and it happens to trade at a discount to the sum-of-its-parts. Owning BRK.B is effectively owning a low-fee, permanently deployed, tax-efficient fund run by one of history's greatest capital allocators. With $189B in cash, one large acquisition can unlock substantial book value per share growth. The stock is historically cheap whenever Berkshire trades below 1.5× book value (roughly 3% of the time over the last decade).
Key Risks
- Succession risk: Greg Abel has not yet had an opportunity to demonstrate capital allocation at scale
- GEICO market-share erosion to Progressive, which uses telematics more aggressively
- BNSF volume tied to coal shipments, which are structurally declining
- Too large to 'move the needle' — a $1B investment is < 0.5% of market cap
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Legal Disclaimer
This analysis is for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services. All financial data is sourced from public filings and may not be current. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. Always conduct your own due diligence and consult a qualified financial advisor before making investment decisions.