Berkshire Hathaway (Berkshire Hathaway) Intrinsic Value: DCF (Dividends Based) : $ (As of Apr. 27, 2024)

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Berkshire Hathaway Intrinsic Value: DCF (Dividends Based) Chart

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Competitive Comparison of Berkshire Hathaway's Intrinsic Value: DCF (Dividends Based)

For the Insurance - Diversified subindustry, Berkshire Hathaway's Price-to-DCF (Dividends Based), along with its competitors' market caps and Price-to-DCF (Dividends Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

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Berkshire Hathaway's Price-to-DCF (Dividends Based) Distribution in the Insurance Industry

For the Insurance industry and Financial Services sector, Berkshire Hathaway's Price-to-DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where Berkshire Hathaway's Price-to-DCF (Dividends Based) falls into.

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Berkshire Hathaway Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. The calculation method is the same as Discounted Cash Flow model except adjusted dividend are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DDM calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.66%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Dividend Growth Rate in the growth stage: g1 = %
The Growth Rate in the growth stage is initially set as the default 10-Year Dividend Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year Dividend Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year Dividend Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
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3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Dividends per Share: adjusted dividends per share = $.
GuruFocus uses adjusted dividends per share by default to ensure that the valuation reflects the total value of the company, as the actual dividend is only a portion of the total value.

All of the default settings can be changed in the DCF calculator and the results are calculated automatically.

Berkshire Hathaway's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

set x = (1+g1)/(1+d) = (1+)/(1+0.11) =
and y = (1+g2)/(1+d) = (1+)/(1+0.11) =

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Berkshire Hathaway  (NYSE:BRK.A) Intrinsic Value: DCF (Dividends Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Dividends model evaluates the companies based on their power of future dividend distribution instead of their assets.

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Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

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Berkshire Hathaway Intrinsic Value: DCF (Dividends Based) Related Terms

Thank you for viewing the detailed overview of Berkshire Hathaway's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Predictability Rank Intrinsic Value: Projected FCF Intrinsic Value: DCF (FCF Based) Intrinsic Value: DCF (Earnings Based) Margin of Safety % (DCF Dividends Based) Margin of Safety % (DCF FCF Based) Margin of Safety % (DCF Earnings Based) 5-Year Dividend Growth Rate Dividends per Share

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Berkshire Hathaway (Berkshire Hathaway) Business Description

Executives

Ronald L Olson	director	EDISON INTERNATIONAL, 2244 WALNUT GROVE AVENUE, ROSEMEAD CA 91770
Ajit Jain	director, officer: Vice Chairman	100 FIRST STAMFORD PLACE, BHRG, STAMFORD CT 06902
Charles T Munger	director, officer: Vice Chairman	355 S GRAND AV, 34TH FL, LOS ANGELES CA 90071
Warren E Buffett	director, 10 percent owner, officer: Chairman and CEO	3555 FARNAM ST, STE 1440, OMAHA NE 68131
Meryl B Witmer	director	655 THIRD AVENUE, 11TH FLOOR, NEW YORK NY 10017
Kenneth I Chenault	director	C/O GENERAL CATALYST, 20 UNIVERSITY ROAD, 4TH FLOOR, CAMBRIDGE MA 02138
David S Gottesman	director
Charlotte Guyman	director	3324 78TH PL. N.E., MEDINA WA 98004
Gregory Abel	director, officer: Vice Chairman	666 GRAND AVE., STE.500, DES MOINES IA 50309
Thomas S Murphy	director	C/O WALT DISNEY CO, 500 S BUENA VISTA STREET, BURBANK CA 91521-1010
Stephen B Burke	director	41 CENTRAL PARK WEST - APT 11A, NEW YORK NY 10023
Keough Donald R /ny	director	200 GALLERIA PARKWAY, SE, SUITE 970, ATLANTA 2Q 30339-5945
Bill & Melinda Gates Foundation Trust	10 percent owner	2365 CARILLON POINT, KIRKLAND WA 98033
Susan L Decker	director	C/O YAHOO INC, 701 FIRST AVE, SUNNYVALE CA 94089
Malcolm G Chace	director	ONE PROVIDENCE WASHINGTON PLZ, 4TH FL, PROVIDENCE RI 02903