Berkshire Hathaway to report third-quarter earnings Friday

The four analysts surveyed by FactSet expect Berkshire Hathaway to report operating earnings per Class A share of $2,716.26. The company makes complex metal parts for the aerospace industry and will be among the largest businesses at Berkshire when the takeover is completed next year.

Berkshire Hathaway Inc.’s third-quarter profit more than doubled as the completion of the Kraft-Heinz merger boosted the value of its stake in the food giant. (NYSE:BRK.B)’s biggest business lines, has been a weak spot this year.

“Overall, quite decent operating earnings”, said Jeff Matthews, a principal at the Ram Partners LP hedge fund and author of “Pilgrimage to Warren Buffett’s Omaha”. Revenue grew 15% year over year to $58.99 billion, below analysts’ estimates of $61.19 billion. Though quarterly and annual results can be lumpy, investors should be encouraged to find that America’s second-largest vehicle insurer continues to add new policies at a relatively brisk pace.

Profits by railThe railroad produced net income of $1.16 billion, an improvement over last year’s earnings of $1.04 billion. And operating income may not improve enough in the third.

BRK operates across three divisions: Insurance and Other, Railroad, Utilities and Energy, and Finance and Financial Products. Before the merger, BRK owned 52.5% of Heinz; after the merger it owned 26.9% of the combined company.

Slower global growth and a stronger dollar have also made it harder for the Berkshire’s operating units to increase profit.

Berkshire shares have slumped 10 percent this year, lagging behind the 2 percent gain for the Standard & Poor’s 500 Index.

Though operating profits fell roughly 4% this quarter from past year, it’s notable that the decline was led by its insurance companies, which simply aren’t supposed to grow earnings in a perfectly straight line.

As I noted in the Berkshire Hathaway earnings preview, this stock isn’t so much about the quarter-to-quarter as it is about the long-term.