Buy Low, Sell High: Berkshire Crushes Earnings but Buffett Warns of Slower Returns
Berkshire Hathaway (NYSE:BRKb) pleasantly surprised investors on Saturday, as the company beat expectations in both earnings per share (EPS) and sales.
The earnings per share stood at $3.92, beating expectations by 3.3%, while the sales reached $93.376 billion, surpassing analysts' forecasts by 15.7%.
Source: InvestingPro
Operating income, which accounts for profits from the company's insurance, railroads, and utilities businesses, reached $8.481 billion in Q4 2023.
It was 28% higher than the $6.625 billion for the same period last year.
For the full year 2023, operating profit was $37.350 billion, up 17% from $30.853 billion the previous year.
Berkshire also held $167.6 billion in liquid assets in the fourth quarter, a record level that exceeds the $157.2 billion held by the conglomerate in the previous quarter.
Berkshire's overall earnings, which include the company's investment gains in listed companies, more than doubled year-on-year to $37.57 billion. For the year as a whole, profits amounted to $96.22 billion.
Buffett, in his annual letter, cautioned investors about expecting remarkable returns.
He mentioned that few companies in the have the potential to significantly impact Berkshire Hathaway. Moreover, he noted a lack of substantial options for deploying capital outside the US.
In essence, Buffett conveyed that Berkshire's performance may not be exceptional.
He suggested that, based on its current business mix, Berkshire could outperform the average U.S. company and operate with a lower risk of permanent capital loss.
However, he tempered expectations, stating that anticipating anything beyond slight improvement is unrealistic.
Despite this cautious outlook, investors responded positively to Berkshire
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