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Berkshire Hathaway (BRK.B) Q2 Earnings: A Beat in the Cards?

Berkshire Hathaway Inc. BRK.B is expected to report second-quarter 2018 earnings on Aug 3 after the market closes. Last reported quarter, the company delivered a positive surprise of 6.47%.

Let’s see, what is in store for the company this yet-to-be reported quarter.

Earnings at Berkshire Hathaway have possibly been aided by an improved performance across all segments. In fact, the Zacks Consensus Estimate for second-quarter earnings is pegged at $2.27, up 35.96% from the year-ago quarter’s level.

The company boasts being the second largest property and casualty insurance company, measured by premium volumes. Given a not-so-active catastrophe environment, better pricing and prudent underwriting practices, the insurance operations have likely delivered improved results in the second quarter. Increase in policy writing considering the company’s compelling product portfolio and a favorable economic development, have possibly aided premium revenues.

Berkshire Hathaway’s economically sensitive non-insurance businesses — utilities and energy plus and manufacturing, service and retail — are expected to have delivered better results in the quarter to be reported.

Contribution from Burlington Northern SantaFe Corp. (BNSF) is estimated to have consistently lent a cushion to results in the light of an increased unit volume and economic strength gaining traction.

Also, strategic acquisitions and investments are likely to have favored the company’s performance in the to-be-reported quarter.

 What Our Quantitative Model Predicts

Our proven model shows that Berkshire Hathaway is likely to beat estimates this earnings season. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Berkshire Hathaway has an Earnings ESP of +3.75%. This is because the Most Accurate Estimate of $2.35 is pegged higher than the Zacks Consensus Estimate of $2.27. You can uncover the best stocks to buy or sell before they are reported with our">Earnings ESP Filter.

Berkshire Hathaway Inc. Price and EPS Surprise

Zacks Rank: Berkshire Hathaway carries a Zacks Rank #2, which increases the predictive power of ESP. Moreover, a positive ESP increases the odds of an earnings surprise. Therefore, this combination significantly raises the stock’s chances of an earnings beat this reporting cycle.

Conversely, we caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Argo Group International Holdings, Ltd. ARGO is set to report second-quarter earnings on Aug 6. The stock has an Earnings ESP of +1.69% and a Zacks Rank of 3. You can see _1link">the complete list of today’s Zacks #1 Rank stocks here.

Assurant, Inc. AIZ has an Earnings ESP of +1.94% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Aug 7.

American Equity Investment Life Holding Company AEL has an Earnings ESP of +0.59% and a Zacks Rank of 2. The company is slated to announce second-quarter earnings on Aug 6.

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