DCF estimates for Snap-On Tools and Berkshire Hathaway

I did DCF estimates for Snap-On Tools (sna) and Berkshire Hathaway (brk-a) over the weekend.  I get $55.61 for SNA and $113,046.04 for BRK.A.  As if my estimates were that precise.  SNA traded at 59.01 on 2/11, meaning I’m valuing the stock 7.2% below the close on Friday.  BRK.A traded at $127,400 on 2/12/11, meaning I’m calculating value at 12.5% below the current stock price.  Barron’sraved about Berkshire Hathaway a couple of weeks ago, but I don’t see it. I’ve got the EPS right in the range Barron’s estimated and am forecasting growth of 3, 10, 8, 8, and 8 percent for the next five years.

A few things:

  1. Analyzing Berkshire Hathaway is very complicated.  It took me all Saturday to read/analyze the 10Ks for the last couple of years.  It is amazing that the head office only consists of 10,000 square feet.  It must be all accountants and a couple of lawyers.
  2. Heavy discounts were applied to Berkshire Hathaway in case of losses from ‘inherited’ insurance coverage  and in case the CEO retires/dies.
  3. I don’t see how railroads and trucking (XTRA) can not be affected by rising oil prices.
Advertisements