With today’s price drop of more than 1%, Berkshire Hathaway is now traded at its lowest valuation level in decades. This includes the bottom price of $73,195 on March 6 of 2009 relative to its book value. Now the stock is traded at just about the book value.
Here are the numbers:
The numbers for shareholders’ equity and total shares outstanding are from the quarter ended on Dec. 31, 2008 and June 30, 2011, respectively. As of today, Berkshire Hathaway is traded at just 1% over its book value. It was traded at 4% over the book value on March 6, 2009.
Berkshire’s book value increased from $70,540 to $98,850 per A share from December 2008 to June 2011. The stock price recovery of Berkshire’s largest equity holdings such as CocaCola (KO, Financial), AmericanExpress (AXP, Financial), Wells Fargo (WFC, Financial) and Procter & Gamble (PG, Financial) since March 2009 certainly helped to increase the book value of Berkshire. In addition, the earning power of Berkshire’s insurance and non-insurance grew tremendously, especially with the acquisition of Burlington Northern railway. The returns from the investments at the market bottom in companies like GE (GE, Financial) and Goodman Sachs (GS, Financial) contributed to the growth, too.
The 10-year valuation page gives us a very clear picture of why Berkshire is at its cheapest level in more than a decade. Here is a screen shot of its stock price relative its price/sales (P/S) and price/book (P/B) valuation bands. We can clearly see from these charts that at the beginning of 2008, when Berkshire was traded at more than $140,000, P/B was close to twice today’s level.
Below is the historical P/B of Berkshire Hathaway. It is also a feature in the 10-year valuation page.
Warren Buffett never disclosed his estimate of the intrinsic value of Berkshire Hathaway. But he did hint that it is higher than the book value. With investments in stocks, bonds and cash that represent most of the book value, and a collection of high quality business operations that grows earnings year over year, the intrinsic value of the business should be far higher than the book value.
With the recent market downturn, many high quality, predictable companies are now traded at historical low P/S and P/B ratios. Check out the list of these companies with GuruFocus historical low P/S and historical low P/B screeners.
Here are the numbers:
| Date | Shareholder's Equity ($Mil) | Total shares outstanding (A Equivalent) | Per ShareBook Value ($) | Stock Price | P/B |
| 9/22/2011 | 163,007 | 1,649,052 | 98,849 | $100,118 | 1.01 |
| 3/6/2009 | 109,267 | 1,549,000 | 70,540 | $73,195 | 1.04 |
The numbers for shareholders’ equity and total shares outstanding are from the quarter ended on Dec. 31, 2008 and June 30, 2011, respectively. As of today, Berkshire Hathaway is traded at just 1% over its book value. It was traded at 4% over the book value on March 6, 2009.
Berkshire’s book value increased from $70,540 to $98,850 per A share from December 2008 to June 2011. The stock price recovery of Berkshire’s largest equity holdings such as CocaCola (KO, Financial), AmericanExpress (AXP, Financial), Wells Fargo (WFC, Financial) and Procter & Gamble (PG, Financial) since March 2009 certainly helped to increase the book value of Berkshire. In addition, the earning power of Berkshire’s insurance and non-insurance grew tremendously, especially with the acquisition of Burlington Northern railway. The returns from the investments at the market bottom in companies like GE (GE, Financial) and Goodman Sachs (GS, Financial) contributed to the growth, too.
The 10-year valuation page gives us a very clear picture of why Berkshire is at its cheapest level in more than a decade. Here is a screen shot of its stock price relative its price/sales (P/S) and price/book (P/B) valuation bands. We can clearly see from these charts that at the beginning of 2008, when Berkshire was traded at more than $140,000, P/B was close to twice today’s level.
Below is the historical P/B of Berkshire Hathaway. It is also a feature in the 10-year valuation page.
Warren Buffett never disclosed his estimate of the intrinsic value of Berkshire Hathaway. But he did hint that it is higher than the book value. With investments in stocks, bonds and cash that represent most of the book value, and a collection of high quality business operations that grows earnings year over year, the intrinsic value of the business should be far higher than the book value.
With the recent market downturn, many high quality, predictable companies are now traded at historical low P/S and P/B ratios. Check out the list of these companies with GuruFocus historical low P/S and historical low P/B screeners.
