Berkshire Hathaway shares were jumping after the company revealed June quarter operating profit of $4,190 per Class A share versus the $3,387 per share that analysts had been expecting.
The performance prompted J.P. Morgan to reiterate an “overweight” rating on the stock, as the firm cited the company’s strong performance across many of its businesses.
“Berkshire reported strong 2Q operating earnings that significantly exceeded our estimate and consensus, driven by better than expected earnings across nearly all segments, particularly insurance,” wrote J.P. Morgan analyst Sarah DeWitt in a note.
“Earnings at Burlington Northern, Manufacturing, Service, Retail and Financial Products also exceeded our outlook while utility earnings were lower than we expected. Strong 2Q results at Berkshire reinforce our positive outlook.”
DeWitt also reiterated a $235 price target.
The conglomerate headed by billionaire investor Warren Buffett, said that quarterly operating profit rose 67 percent for the quarter.
According to Berkshire Hathaway’s report, underwriting profit at the Geico auto insurance unit more than quintupled, while the BNSF railroad benefited from demand to ship consumer products, grain, petroleum and steel, and the Berkshire Hathaway Automotive car dealership financed more vehicle purchases.
Doug Kass, who runs the hedge fund Seabreeze Partners Management in Florida, remarked, “Good results across the board.”
Net income for the second quarter almost tripled for the company, to $12.01 billion, or $7,301 per Class A share, from $4.26 billion, or $2,592 per share, a year earlier.
Operating profit rose to $6.89 billion, or roughly $4,190 per Class A share, from $4.12 billion, or $2,505 per share, a year earlier. Analysts had been waiting for an operating profit of $3,387 per share, according to Thomson Reuters.
The conglomerate also ended June with $111.1 billion of cash and equivalent. Buffett has not bought back stock this year, but has spent money on stocks, including a stake in Apple. Berkshire said it ended June with a $47.2 billion stake in the iPhone maker.
Apple recently hit a trillion-dollar market value.
Morningstar analysts Greggory Warren said, “Looking more closely at Berkshire’s insurance operations, all three of the company’s insurance units – Geico, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group – reported earned premium growth during the second quarter.”
In June Buffett had said “business is good” given the strength of the U.S. economy. He added, “Right now, there’s no question: it’s feeling strong. I mean, if we’re in the sixth inning, we have our sluggers coming to bat right now.”