If you’ve ever wondered whether now is the right time to get in on Berkshire Hathaway, you’re not alone. Investors everywhere are weighing what to do, especially with the stock’s blend of stability and steady growth turning more than a few heads this year. Berkshire’s share price has ticked up by 0.7% in just the past week, holding steady at 0.0% over the past month. It’s the longer-term moves that really stand out: up 9.2% year-to-date, 5.9% over the last year, a massive 74.3% across three years, and a striking 131.5% in the last five years. Those numbers speak to the company’s resilience and its ability to capture gains even as the broader market lurches through economic cycles.
Underlying these price movements are shifts in how investors perceive Berkshire’s risk and growth potential. Recent market trends have nudged defensive stocks like Berkshire further into the spotlight, as confidence in the company’s diversified holdings continues to attract both new and seasoned investors. Notably, our latest valuation check gives Berkshire a solid score of 4 out of 6, meaning it’s currently undervalued on two-thirds of the relevant metrics. That’s an encouraging sign, but to truly understand what this score means, we need to break down how valuation is calculated. In the next section, we’ll dig into those valuation approaches, plus one even smarter way to judge whether Berkshire offers real value for your portfolio.
The Excess Returns model is a straightforward way to gauge a company’s valuation by measuring how much profit it generates over and above what investors could earn from a risk-free investment. In other words, it examines whether Berkshire Hathaway is using its shareholders’ money in a way that consistently beats the market’s baseline returns.
Using this approach, Berkshire Hathaway stands out with the following data:
Book Value: $464,307.83 per share
Stable EPS: $64,311.36 per share (Source: Median Return on Equity from the past 5 years.)
Cost of Equity: $37,632.35 per share
Excess Return: $26,679.01 per share
Average Return on Equity: 13.00%
Stable Book Value: $494,556.79 per share (Source: Weighted future Book Value estimates from 2 analysts.)
On balance, these numbers suggest Berkshire continues to generate healthy returns after accounting for the true cost of its capital. According to this analysis, the intrinsic value of the stock is about 31.9% higher than its current trading price. This makes Berkshire Hathaway appear notably undervalued using this lens.
Result: UNDERVALUED
BRK.B Discounted Cash Flow as at Oct 2025
Our Excess Returns analysis suggests Berkshire Hathaway is undervalued by 31.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
The price-to-earnings (PE) ratio is a widely used measure for valuing profitable companies like Berkshire Hathaway, as it directly links the company’s current share price to its per-share earnings. This makes it a powerful metric for investors who want to see how much they are paying for each dollar of profits the company generates.
It is important to remember that what counts as a “normal” or “fair” PE ratio is not set in stone. Factors such as a company’s expected earnings growth, stability, and risk profile all play a role in where the ratio should sit. Higher-growth and lower-risk companies often trade at a premium, while slower-growing or riskier firms typically demand a lower multiple.
Currently, Berkshire Hathaway trades at a PE ratio of 16.9x. This is just above the diversified financial industry average of 16.4x, and well below the peer group average of 25.4x. However, to provide a more precise benchmark, Simply Wall St calculates a “Fair Ratio” for Berkshire at 19.8x. This proprietary figure is designed to reflect a more nuanced view, factoring in not just broad industry trends but also Berkshire’s unique growth outlook, profitability, risk, and size.
The “Fair Ratio” goes beyond simple comparisons to peers or industry averages. It considers the specific circumstances that might warrant Berkshire trading at a premium or discount, such as its strong profit margins and stable earnings, along with its position in the market and any identifiable risks. By doing so, it offers a fairer, context-based estimate of intrinsic value.
With the current PE of 16.9x sitting slightly below the Fair Ratio of 19.8x, Berkshire Hathaway appears moderately undervalued on this basis, suggesting some room for upside compared to its fair value.
Result: UNDERVALUED
NYSE:BRK.B PE Ratio as at Oct 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Simply put, a Narrative is your personal story or thesis about a company, where you connect the dots between what you believe about its future and the numbers—your own estimates of fair value, revenue, earnings, and profit margins. Narratives bridge the company’s story with your financial forecast, helping you arrive at a fair value based on your outlook.
This approach is both simple and powerful, and is available for free to millions of investors on Simply Wall St’s Community page. Narratives empower you to make more confident decisions by dynamically updating your fair value estimate whenever new news, results, or forecasts come in. Instead of relying on static numbers, you can see how your view of the company stacks up against fresh information. You can even compare your fair value to the current share price to decide if it’s time to buy, sell, or hold.
For example, for Berkshire Hathaway, some investors’ Narratives see explosive growth ahead and assign a high fair value, while others believe the best days are past and set a much lower target. Narratives make these perspectives visible and actionable, helping you invest smarter, not harder.
Do you think there’s more to the story for Berkshire Hathaway? Create your own Narrative to let the Community know!
NYSE:BRK.B Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include BRK-B.
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