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Berkshire Hathaway Inc. (BRK-B) Intrinsic Value

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

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Berkshire Hathaway Inc. (BRK-B)

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Intrinsic Value (DCF)

Current$492.62
→
Intrinsic$1,001.36
+103%
$611.89$1,001.36$1,943.32
Market implies 1% growth for 5 years
DCF analysis suggests BRK-B could have 103% upside at 8% growth — verify assumptions match your view.
At $493, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $612 → Bull $1943. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →4%6%8%10%
6%$1414$1552$1700$1859
8%$835$915$1001$1094
10%$585$640$699$763
12%$445$487$531$579

Bull Case

  • Bull case ($1943) offers 294% upside at 10% growth, 7% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($612) with 6% growth, 10% 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$2.67T

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate8.1%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.

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Frequently Asked Questions

Is BRK-B stock undervalued or overvalued?
🟢 UNDERVALUED

BRK-B trades at $492.62 vs. our DCF-derived intrinsic value of $1001.36, implying +101% upside. At a 8.1% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of BRK-B's future cash flows. The bear case ($651.61) still suggests upside, providing margin of safety.

What is BRK-B'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 8.1% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $95.80B net debt and dividing by 2.16B shares: Bear $651.61 | Base $1001.36 | Bull $1559.10. Current price $492.62 implies +101% to base case.

How is BRK-B'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=8.1%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($2255.31B).

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: 25.3x.