Berkshire Hathaway (BRK.B) Stock Could Be 25% Undervalued Despite $359 Billion Cash Holdings

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Berkshire Hathaway has delivered a strong run in recent years, and the question now is whether the current share price is still in line with the returns the conglomerate earns on its capital. Over the past 5 years, Berkshire Hathaway has returned 108.9%, which places a lot of weight on how efficiently the group can keep compounding the cash it reinvests. The insurance operations now hold about US$359b in cash, which can support flexible capital deployment and may influence how much return the business can extract from each dollar it controls. What if you looked at Berkshire Hathaway through its earnings instead? See why Berkshire Hathaway's 16.3x P/E tells a different valuation story.