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Wall Street JournalCan Berkshire Hathaway's Manufacturing Subsidiary Power its Growth?
Berkshire Hathaway’s (BRK.B) manufacturing operations are a vital pillar of its long-term growth strategy, contributing significantly to revenues, earnings stability and diversification. Spanning industrial, building, and consumer products, these businesses operate in cyclical yet essential sectors, providing dependable cash flows that help offset fluctuations in financial markets and insurance results.
These autonomous manufacturing subsidiaries foster long-term planning, innovation, and disciplined capital allocation. Many of these firms are industry leaders with strong competitive advantages, such as efficient production, specialized technologies and long-standing customer relationships. Their consistent earnings boost Berkshire’s overall profitability and help sustain its large capital base, which fuels investments across other segments, including insurance and public equities. Notably, the manufacturing segment contributed 20% of BRK.B’s total revenues in the first quarter of 2025.
This segment aligns with Warren Buffett’s strategy of acquiring businesses with durable fundamentals and predictable earnings. A prime example is Precision Castparts, which, despite temporary challenges in the aerospace sector, remains strategically important due to its presence in high-barrier, specification-driven markets. The strength and resilience of such assets enhance Berkshire’s intrinsic value and act as a buffer during economic downturns.
In essence, the manufacturing segment anchors Berkshire in the real economy. Through job creation, reinvestment in domestic production and long-term strategic acquisitions, it drives sustainable growth and positions the company to capitalize on broader economic and industrial trends.
What About Competitors?
3M Company’s MMM business is being driven by strong performance in its Safety and Industrial segment, supported by demand for roofing granules, adhesives, and tapes. Additionally, the 3M Company benefits from its strength in the commercial aircraft and defense markets, with project wins boosting its Transportation and Electronics segment. 3M Company remains resilient.
Honeywell International Inc.’s HON market leadership, broad portfolio and strong dealer network give it a competitive edge in aerospace and industrial markets. While Honeywell International is pursuing a value-driven transformation strategy, it faces headwinds from industrial automation softness, high debt and escalating expenses.
BRK.B’s Price Performance
Shares of BRK.B have gained 6.7% year to date, underperforming the industry.
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BRK.B’s Expensive Valuation
BRK.B trades at a price-to-book value ratio of 1.61, above the industry average of 1.58. It carries a Value Score of D.
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No Estimate Movement for BRK.B
The Zacks Consensus Estimate for BRK.B’s second-quarter and third-quarter 2025 EPS witnessed no movement over the past 30 days. The consensus estimate for full-year 2025 and 2026 also witnessed no movement over the past 30 days.
Image Source: Zacks Investment Research
The consensus estimates for BRK.B’s 2025 and 2026 revenues indicate a year-over-year increase. While the consensus estimate for BRK.B’s 2025 EPS indicates a decline, the same for 2026 suggests an increase.
BRK.B stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Honeywell International Inc. (HON): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).