How did BRK.A's Q4 2024 earnings surprise investors?

Berkshire Hathaway Inc. (BRK.A) reported a net income of $19.75 billion for Q4 2024, which was a notable figure given the context of the quarter's earnings expectations and the company's historical performance. Here's how the earnings surprise can be analyzed:

1. **Comparison with Expectations**: Analysts had anticipated earnings per share (EPS) of approximately $7,610.56 for the quarter, with a range of expectations spanning from $6,780.00 to $8,651.69 per share. The reported EPS of $7,023.01 was below this average, indicating that the earnings fell short of analysts' expectations.
2. **Net Income Decline**: The net income of $19.75 billion for Q4 2024 represents a decrease from the previous year's net income of $30.5 billion for the same quarter. This decline is a significant factor in the earnings surprise, as it suggests a weakening trend in the company's financial performance.

|code|Ticker|Name|Date|Net Income YoY|Net Income|market_code|
|---|---|---|---|---|---|---|
|BRK.A|BRK.A.N|Berkshire Hathaway A|2024 Q1|-64.11332046871941|1.2832E10|169|
|BRK.A|BRK.A.N|Berkshire Hathaway A|2024 Q2|-15.749053841266333|3.0498E10|169|
|BRK.A|BRK.A.N|Berkshire Hathaway A|2024 Q3|310.71059123100184|2.648E10|169|
|BRK.A|BRK.A.N|Berkshire Hathaway A|2024 Q4|-47.690555643837065|1.9751E10|169|

3. **Revenue Performance**: The company's revenue fell by 0.2% year-over-year to $93.00 billion, which was below the expected revenue of $97.81 billion. This decline in revenue, coupled with the decrease in net income, contributed to the earnings surprise.
4. **Segment Performance**: Specific segments within Berkshire Hathaway, such as Insurance and Other, and Railroad, Utilities, and Energy, experienced declines in revenues. For instance, revenues in the Insurance and Other segment decreased, while costs and expenses increased, leading to a decrease in operating income.
5. **Market Reaction**: The market responded to the earnings report with a decline in the company's shares, which had fallen by 1.9% during the quarter. This decline reflects investor disappointment in the earnings performance and suggests that the market was anticipating better results.

In conclusion, Berkshire Hathaway's Q4 2024 earnings fell short of investor expectations due to a decline in net income and revenue. The company's performance was notably affected by challenges in specific segments, such as Insurance and Other, and Railroad, Utilities, and Energy, which experienced decreases in revenues and increases in costs. These factors combined to create an earnings surprise that was largely negative, with the company's stock price reflecting the disappointment of investors.