Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Berkshire Hathaway Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.3% to 1.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 78, DPO 78, DIO 39). At a 7.6% WACC with mid-year discounting, the terminal value (75% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $569.51 per share, suggesting BRK-B is undervalued by 19.5% at the current price of $476.69.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 95,382 | 98,306 | 91,888 | 92,952 | 94,028 | 96,379 |
| (−) Net Interest | 5,322 | 5,485 | 5,127 | 5,186 | 5,246 | 5,378 |
| (+) D&A | 17,610 | 18,868 | 19,809 | 19,696 | 19,715 | 20,208 |
| EBITDA | 118,315 | 122,659 | 116,824 | 117,835 | 118,990 | 121,964 |
| (−) Tax | 17,918 | 18,467 | 17,261 | 17,461 | 17,664 | — |
| (−) CapEx | 19,565 | 20,165 | 18,849 | 19,067 | 19,288 | — |
| (−) ΔWC | 8,923 | 1,675 | -3,676 | 609 | 616 | — |
| Free Cash Flow (FCF) | 71,908 | 82,352 | 84,389 | 80,697 | 81,422 | — |
| Peers' EBITDA Multiple | 11.6x | |||||
| Terminal Value | 1,416,005 | |||||
| WACC / Discount Rate | 7.61% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 69,319 | 73,774 | 70,254 | 62,430 | 58,537 | 981,361 |
| Enterprise Value | 1,315,676 | |||||
| Projection Period | 334,314 | 25.4% | ||||
| Terminal Value | 981,361 | 74.6% | ||||
| (−) Current Net Debt | 87,077 | |||||
| Equity Value | 1,228,599 | |||||
| (÷) Outstanding Shares | 2157M | |||||
| Fair Price | $569 | +19.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.6x | 9.6x | 11.6x | 13.6x | 15.6x |
|---|---|---|---|---|---|
| 5.6% | $449 | $535 | $621 | $708 | $794 |
| 6.6% | $431 | $513 | $595 | $677 | $759 |
| 7.6% | $413 | $491 | $570 | $648 | $726 |
| 8.6% | $396 | $471 | $546 | $620 | $695 |
| 9.6% | $380 | $451 | $523 | $594 | $666 |
Current price: $476.69. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.