Berkshire earnings may prove stock is cheap. And that Abel and Buffett think so too
Berkshire Hathaway investors will be watching for a sharp acceleration in share buybacks when the conglomerate reports second-quarter results Saturday morning, with recent strength across insurance and railroad peers also raising expectations for its operating businesses. Berkshire may have repurchased roughly $8.5 billion of its own stock from April 15 through July 14, according to an estimate from UBS analyst Brian Meredith. That would mark a dramatic pickup from just $235 million in the first quarter and signal that the company saw its shares as increasingly attractive following a pullback. Meredith estimates Berkshire shares are trading at an 8% discount to intrinsic value. His buyback calculation is based on a regulatory filing Berkshire made in July tied to Chairman Warren Buffett’s charitable stock donation, which disclosed his economic ownership of the company’s Class A share equivalents. Shares of Berkshire are up just 3% on the year, underperforming the S & P 500’s 13% gain. Though the stock has been on the upturn lately, rising 9% the last three months. This will be the second earnings report under new CEO Greg Abel. BRK.A YTD mountain Berkshire Hathaway shares ytd Not everyone sees the filing as providing a clear read-through to repurchases. Meyer Shields, an analyst at Keefe, Bruyette & Woods, said he wouldn’t necessarily connect the stock donations with Berkshire’s buyback activity. Buffett’s donations are typically made in shares, with the recipient foundations then selling stock in the open market, he said. Still, Shields said a meaningful acceleration in repurchases would send an important signal about how Berkshire views its own valuation. “A pickup would imply a much more optimistic view of intrinsic value than what we inferred in 1Q26 based on the relatively low buybacks,” Shields told CNBC. Solid operating earnings? Expectations are also upbeat for Berkshire’s operating businesses, after peers in two of its biggest areas — property and casualty insurance and railroads — reported strong second-quarter results in recent weeks. At BNSF, Berkshire’s railroad, UBS expects accelerating traffic volumes to support stronger earnings, though higher fuel costs could weigh modestly on margins. Berkshire Hathaway Energy is also poised for a strong quarter, according to UBS, which forecasts a 5% increase in revenue and a 31% jump in pre-tax operating earnings, reflecting improving demand and favorable operating leverage across its utility portfolio. The outlook for insurance is more mixed. UBS expects Geico’s underwriting margins to narrow from a year earlier as the insurer sacrifices some profitability to pursue growth. “With attractive underwriting margins, we expect GEICO is leaning into growth with flat to declining rates, increased ad spend, and diversifying distribution into the independent agency channel,” Meredith said in a note. “This should drive higher loss and expense ratios as well as improved growth.” The results will also give investors a fresh look at Berkshire’s enormous cash pile and how aggressively the company is putting that capital to work. The quarter included the closing of Berkshire’s acquisition of Taylor Morrison and a $10 billion investment in Alphabet to help fund AI development.