A valuation model from Simply Wall St finds Berkshire Hathaway’s Class B shares may be substantially undervalued, estimating an intrinsic value of about $798.38 per share versus a recent market price near $477 — implying roughly a 40.2% gap in favour of buyers. The result is driven by an Excess Returns framework that capitalizes the amount by which Berkshire’s return on equity exceeds the shareholders’ required return and converts those surplus earnings into a per‑share value.
The model uses unusually large per‑share accounting figures for Berkshire: a reported Book Value of $498,663.02 per Class B share and a Stable EPS of $66,585.43, calculated from the median five‑year return on equity. Simply Wall St’s inputs put the Cost of Equity at $40,445.18 per share, producing an Excess Return of $26,140.25 per share. Those numbers are underpinned by an Average Return on Equity of 12.21% and a Stable Book Value forecast of $545,417.94 per share, which the article says is sourced in part from two analysts’ future book value estimates.
On a checklist of valuation metrics, Berkshire scores five out of six, according to the report, and the company’s conventional P/E also looks broadly in line with peers. Berkshire trades at a P/E of 15.39x, close to the Diversified Financial industry average of 15.79x and below the peer group average of 22.43x. Simply Wall St’s more tailored “Fair Ratio” — an adjusted P/E designed to reflect Berkshire’s growth profile, risk, margins and market cap — sits at 16.57x, marginally higher than the actual multiple and reinforcing the assessment of slight undervaluation on that basis.
The valuation comes as the share price has shown modest near‑term softness amid a long track record of strong multi‑year returns. Simply Wall St notes the shares were up 1.9% over the previous seven days but down 4.3% over 30 days and 3.9% year‑to‑date; the stock slipped 3.3% over the last year while posting gains of 52.7% and 79.4% over three and five years, respectively. The firm frames those shorter‑term movements against Berkshire’s diversified mix of operating businesses and its longstanding reputation for disciplined capital allocation.
Simply Wall St also highlights a tool it calls “Narratives,” which lets investors adjust forecast assumptions — for example, alternative views on future revenue, margins, or capital allocation — to see how those stories change the model’s fair value estimate. The firm stresses the sensitivity of any model to inputs such as future book value and the assumed sustainable return on equity; the $798 fair value outcome depends materially on those choices.
The article emphasizes that the analysis is general in nature and not investment advice, noting it relies on historical data and analyst forecasts and may not reflect the latest company announcements or qualitative developments. For investors weighing Berkshire at roughly $477 a share, the Simply Wall St analysis presents a clear, assumption‑driven case that the stock could be undervalued — but it also highlights that outcomes hinge on how Berkshire’s future returns on equity and book‑value growth actually unfold.