The Zacks Analyst Blog Berkshire, The Progressive and The Allstate

For Immediate ReleasesChicago, IL – November 25, 2024 – Zacks.com announces the list of stocks and featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include including Berkshire Hathaway Inc.’s (BRK.B), The Progressive Corp. PGR and The Allstate Corp. ALL.Here are highlights from Monday’s Analyst Blog:Berkshire Hathaway Trades at a Premium: How to Play ItBerkshire Hathaway Inc.’s shares are trading premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.61X is higher than the industry average of 1.59. It has a Value Score of D, indicating stretched valuation.This insurance behemoth has a market capitalization of more than $1 trillion. The average volume of shares traded in the last three months was 3.9 million.The stock however remains attractively valued compared with other insurers like The Progressive Corp. and The Allstate Corp. Berkshire shares have gained 4.4% quarter to date, underperforming its industry and the Zacks S&P 500 composite’s returns.Factors Favoring BerkshireThe insurance business primarily contributes to Berkshire’s top line. About 40% of the company’s operating earnings came from its insurance underwriting and insurance investment subsidiaries in 2023. Other operations — including utilities and energy, and manufacturing, service and retail — accounted for the remaining 60%.Thus, occurrences of catastrophe activities weigh on profitability. The insurer incurred $465 million in catastrophe events in the first nine months of 2024. Berkshire estimates pre-tax incurred losses between $1.3 billion and $1.5 billion from Hurricane Milton that struck Florida in October 2024.Insurers invest a portion of their premiums and, thus, are direct beneficiaries of an improved rate environment. With two consecutive rate cuts, investment income is likely to be dampened.U.S. GDP grew 2.8% in the third quarter of 2024, which slowed from 3% in the second quarter. The performances of Berkshire’s utilities and energy, and manufacturing, service and retail units are dependent on the health of the economy. With inflation cooling and a decent job market, we expect these units to continue to deliver better results.With a huge cash hoard, Berkshire acquires entities or adds stakes of companies that have consistent earning power and generate impressive returns on equity. While prudent acquisitions open up more business opportunities for the company, bolt-on acquisitions enhance earnings of the existing business.In its efforts to distribute wealth to shareholders, Berkshire bought back shares worth $2.9 billion in the first nine months of 2024.Berkshire’s Return on CapitalReturn on equity in the trailing 12 months was 6.9%, underperforming the industry average of 7.6%. Return on equity, a profitability measure, here reflects BRK.B’s inefficiency in utilizing its shareholders' fund.The company’s return on invested capital in the trailing 12 months was 5.5%, lower than the industry average of 5.8%. This reflects BRK.B’s inefficiency in utilizing funds to generate income.Optimistic Analyst SentimentOne of the three analysts covering the stock has raised estimates for 2024 and 2025 over the past 30 days. The Zacks Consensus Estimate for 2024 implies a 14.6% year-over-year increase, whereas the same for 2025 suggests a 1.4% rise.The consensus estimate for 2024 and 2025 has moved 0.4% and 0.2% north, respectively, in the past 30 days.ConclusionHolding shares of Berkshire renders dynamism to one’s portfolio. Also, it has Warren Buffett at its helm, who has been creating tremendous value for shareholders over nearly six decades with his unique skills.However, Berkshire shares have been trading at a premium for quite some time. Due to its price underperformance and unfavorable return on capital, it is better to shy away from the Zacks Rank #4 (Sell) stock as of now.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.com                                     https://www.zacks.com                                                Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report The Allstate Corporation (ALL): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks