Warren Buffet’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) delivered a loss in Q3 as the volatility in the stock market weighed on the company’s equity investments. However, investors shouldn’t focus on Berkshire’s net loss, as this is due to the unrealized losses arising from the change in market prices of its investments in equity securities. Instead, investors should keep an eye on its operating income, which is growing and supporting its stock price.
Berkshire delivered investment and derivative contract losses of $13.45 billion, which hurt its bottom line. Despite reporting a loss, shares of Berkshire Hathaway have outperformed the S&P 500 Index (SPX) by a wide margin in 2022. BRK.B stock has declined by about 4% year-to-date compared to a decrease of over 22% in the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index.
This comes on the back of its growing operating income. In Q3, Berkshire delivered operating earnings of $7.76 billion, which increased by about 20% in Q3. Moreover, it registered an increase of about 19% in the first nine months of 2022.
The increase in operating earnings reflects the benefits from the growth in its utilities and energy businesses, insurance investments, manufacturing, and retail businesses. However, this was partially offset by the decline in the insurance underwriting and railroads business.
Is Berkshire a Good Stock to Buy?
Berkshire Hathaway stock has received two Buy recommendations for a Moderate Buy consensus rating on TipRanks. Further, BRK.B stock has positive signals from hedge funds and retail investors. TipRanks’ data shows that hedge funds bought 5.3M Berkshire stock last quarter. Meanwhile, 1.7% of investors holding portfolios on TipRanks bought BRK.B stock in one month.
Bottom Line
The volatility in the stock market will likely weigh on its bottom line in the near term. Nonetheless, its operating earnings showed resilience and have consistently risen, limiting the downside in BRK.B stock.
On TipRanks, Berkshire Hathaway has an average price target of $362, implying 25.9% upside potential to current levels.
