Is there value in Berkshire Hathaway Inc. (NYSE:BRK.A)? VC Score Hits 32

Checking in on some valuation rankings, Berkshire Hathaway Inc. (NYSE:BRK.A) has a Value Composite score of 32. Developed by James O’Shaughnessy, the VC score uses five valuation ratios. These ratios are price to earnings, price to cash flow, EBITDA to EV, price to book value, and price to sales. The VC is displayed as a number between 1 and 100. In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 39. 

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Watching some historical volatility numbers on shares of Berkshire Hathaway Inc. (NYSE:BRK.A), we can see that the 12 month volatility is presently 23.4851. The 6 month volatility is 21.8972, and the 3 month is spotted at 27.292. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period. 

After a recent scan, we can see that Berkshire Hathaway Inc. (NYSE:BRK.A) has a Shareholder Yield of -0.000608 and a Shareholder Yield (Mebane Faber) of 0.00954. The first value is calculated by adding the dividend yield to the percentage of repurchased shares. The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

The Return on Invested Capital (aka ROIC) for Berkshire Hathaway Inc. (NYSE:BRK.A) is 0.087035.  The Return on Invested Capital is a ratio that determines whether a company is profitable or not.  It tells investors how well a company is turning their capital into profits.  The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital.  The employed capital is calculated by subrating current liabilities from total assets.  Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years.  The ROIC Quality of Berkshire Hathaway Inc. (NYSE:BRK.A) is 5.412727.  This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC.  The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets).  The ROIC 5 year average of Berkshire Hathaway Inc. (NYSE:BRK.A) is 0.079904.

Ratios

The Current Ratio of Berkshire Hathaway Inc. (NYSE:BRK.A) is 1.59. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.
Gross Margin Score

The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of Berkshire Hathaway Inc. (NYSE:BRK.A) is 12. The more stable the company, the lower the score. If a company is less stable over the course of time, they will have a higher score.
Leverage Ratio

The Leverage Ratio of Berkshire Hathaway Inc. (NYSE:BRK.A) is 0.137714. Leverage ratio is the total debt of a company divided by total assets of the current and past year divided by two. Companies take on debt to finance their day to day operations. The leverage ratio can measure how much of a company’s capital comes from debt. With this ratio, investors can better estimate how well a company will be able to pay their long and short term financial obligations.

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Berkshire Hathaway Inc. (NYSE:BRK.A) for last month was 0.92469. This is calculated by taking the current share price and dividing by the share price one month ago. If the ratio is greater than 1, then that means there has been an increase in price over the month. If the ratio is less than 1, then we can determine that there has been a decrease in price. Similarly, investors look up the share price over 12 month periods. The Price Index 12m for Berkshire Hathaway Inc. (NYSE:BRK.A) is 1.03464.

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