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Berkshire Hathaway Inc. (BRK-A) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Berkshire Hathaway Inc. (BRK-A)

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Intrinsic Value (DCF)

Current$738,691.00
→
Intrinsic$1,154,546.41
+56%
$756,999.27$1,154,546.41$1,945,932.02
Market implies 1% growth for 5 years
DCF analysis suggests BRK-A could have 56% upside at 8% growth — verify assumptions match your view.
At $738691, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $756999 → Bull $1945932. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →4%6%8%10%
8%$1423239$1559425$1705845$1863076
10%$966006$1056924$1154546$1259249
12%$724024$791156$863147$940266
14%$574286$626827$683100$743310

Bull Case

  • Bull case ($1945932) offers 163% upside at 10% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($756999) with 6% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$96.11B
Year 2$103.80B
Year 3$112.11B
Year 4$121.08B
Year 5$130.76B
Terminal$2.07T

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$89.00BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

Related Analysis

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Frequently Asked Questions

Is BRK-A stock undervalued or overvalued?
🟢 UNDERVALUED

BRK-A trades at $738691.00 vs. our DCF-derived intrinsic value of $1154546.41, implying +54% upside. At a 9.5% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of BRK-A's future cash flows. The bear case ($805157.43) still suggests upside, providing margin of safety.

What is BRK-A's intrinsic value?

Using a 5-year DCF model: Base FCF of $89.00B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $83.03B net debt and dividing by 0.00B shares: Bear $805157.43 | Base $1154546.41 | Bull $1637898.62. Current price $738691.00 implies +54% to base case.

How is BRK-A's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($1743.27B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 19.6x.