FIRST AMERICAN FINANCIAL (FAF)
US31847R1023 - Common Stock
Taking everything into account, FAF scores 3 out of 10 in our fundamental rating. FAF was compared to 144 industry peers in the Insurance industry. FAF has a bad profitability rating. Also its financial health evaluation is rather negative. FAF has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
FAF had positive earnings in the past year.
FAF had a positive operating cash flow in the past year.
Each year in the past 5 years FAF has been profitable.
In the past 5 years FAF always reported a positive cash flow from operatings.
1.2 Ratios
FAF's Return On Assets of 0.56% is on the low side compared to the rest of the industry. FAF is outperformed by 69.72% of its industry peers.
The Return On Equity of FAF (1.82%) is worse than 74.65% of its industry peers.
FAF has a Return On Invested Capital (1.45%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for FAF is in line with the industry average of 4.61%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.56% | ||
| ROE | 1.82% | ||
| ROIC | 1.45% |
ROA(3y)3.53%
ROA(5y)4.44%
ROE(3y)10.54%
ROE(5y)12.36%
ROIC(3y)4.98%
ROIC(5y)5.75%
1.3 Margins
FAF has a Profit Margin of 1.58%. This is in the lower half of the industry: FAF underperforms 73.24% of its industry peers.
FAF's Profit Margin has declined in the last couple of years.
With a Operating Margin value of 4.73%, FAF is not doing good in the industry: 69.01% of the companies in the same industry are doing better.
In the last couple of years the Operating Margin of FAF has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 4.73% | ||
| PM (TTM) | 1.58% | ||
| GM | N/A |
OM growth 3Y-14.08%
OM growth 5Y-3.91%
PM growth 3Y-28.37%
PM growth 5Y-15.24%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
FAF has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for FAF remains at a similar level compared to 1 year ago.
Compared to 5 years ago, FAF has less shares outstanding
FAF has a better debt/assets ratio than last year.
2.2 Solvency
FAF has a debt to FCF ratio of 8.70. This is a slightly negative value and a sign of low solvency as FAF would need 8.70 years to pay back of all of its debts.
The Debt to FCF ratio of FAF (8.70) is worse than 69.72% of its industry peers.
A Debt/Equity ratio of 0.54 indicates that FAF is somewhat dependend on debt financing.
FAF has a Debt to Equity ratio of 0.54. This is in the lower half of the industry: FAF underperforms 72.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 8.7 | ||
| Altman-Z | N/A |
ROIC/WACC0.17
WACC8.35%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
FAF shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -14.97%.
The Earnings Per Share has been decreasing by -3.88% on average over the past years.
The Revenue has decreased by -8.80% in the past year.
Measured over the past years, FAF shows a small growth in Revenue. The Revenue has been growing by 0.87% on average per year.
EPS 1Y (TTM)-14.97%
EPS 3Y-12.14%
EPS 5Y-3.88%
EPS Q2Q%9.84%
Revenue 1Y (TTM)-8.8%
Revenue growth 3Y-5.38%
Revenue growth 5Y0.87%
Sales Q2Q%-14.4%
3.2 Future
FAF is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.53% yearly.
Based on estimates for the next years, FAF will show a small growth in Revenue. The Revenue will grow by 6.89% on average per year.
EPS Next Y13.25%
EPS Next 2Y23.19%
EPS Next 3Y19.53%
EPS Next 5YN/A
Revenue Next Year-0.42%
Revenue Next 2Y7.43%
Revenue Next 3Y6.89%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
FAF is valuated correctly with a Price/Earnings ratio of 15.86.
Based on the Price/Earnings ratio, FAF is valued a bit more expensive than the industry average as 60.56% of the companies are valued more cheaply.
FAF's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.28.
With a Price/Forward Earnings ratio of 10.45, the valuation of FAF can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of FAF is on the same level as its industry peers.
FAF's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 23.53.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.86 | ||
| Fwd PE | 10.45 |
4.2 Price Multiples
FAF's Enterprise Value to EBITDA ratio is in line with the industry average.
FAF's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. FAF is more expensive than 63.38% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.56 | ||
| EV/EBITDA | 11.95 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
FAF's earnings are expected to grow with 19.53% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.2
PEG (5Y)N/A
EPS Next 2Y23.19%
EPS Next 3Y19.53%
5. Dividend
5.1 Amount
FAF has a Yearly Dividend Yield of 3.60%.
FAF's Dividend Yield is a higher than the industry average which is at 3.13.
FAF's Dividend Yield is rather good when compared to the S&P500 average which is at 2.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.6% |
5.2 History
The dividend of FAF has a limited annual growth rate of 5.50%.
FAF has been paying a dividend for at least 10 years, so it has a reliable track record.
FAF has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.5%
Div Incr Years14
Div Non Decr Years14
5.3 Sustainability
236.75% of the earnings are spent on dividend by FAF. This is not a sustainable payout ratio.
FAF's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP236.75%
EPS Next 2Y23.19%
EPS Next 3Y19.53%
FIRST AMERICAN FINANCIAL
NYSE:FAF (1/14/2025, 8:04:00 PM)
After market: 59.4 -0.08 (-0.13%)59.48
+1.27 (+2.18%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners88.52%
Inst Owner Change0.01%
Ins Owners1.17%
Ins Owner Change-0.08%
Market Cap6.13B
Analysts76
Price Target77.93 (31.02%)
Short Float %1.28%
Short Ratio2.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.6% |
Dividend Growth(5Y)5.5%
DP236.75%
Div Incr Years14
Div Non Decr Years14
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)12.34%
Min EPS beat(2)8.13%
Max EPS beat(2)16.55%
EPS beat(4)2
Avg EPS beat(4)-2.89%
Min EPS beat(4)-24.48%
Max EPS beat(4)16.55%
EPS beat(8)5
Avg EPS beat(8)-0.77%
EPS beat(12)8
Avg EPS beat(12)3.43%
EPS beat(16)12
Avg EPS beat(16)7.8%
Revenue beat(2)0
Avg Revenue beat(2)-3.6%
Min Revenue beat(2)-5.45%
Max Revenue beat(2)-1.75%
Revenue beat(4)0
Avg Revenue beat(4)-3.07%
Min Revenue beat(4)-5.45%
Max Revenue beat(4)-1.34%
Revenue beat(8)2
Avg Revenue beat(8)-1.74%
Revenue beat(12)4
Avg Revenue beat(12)0.87%
Revenue beat(16)8
Avg Revenue beat(16)4.15%
PT rev (1m)0%
PT rev (3m)13.35%
EPS NQ rev (1m)0%
EPS NQ rev (3m)13.66%
EPS NY rev (1m)0.41%
EPS NY rev (3m)7.7%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)4.44%
Revenue NY rev (1m)-0.03%
Revenue NY rev (3m)-2.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.86 | ||
| Fwd PE | 10.45 | ||
| P/S | 1.04 | ||
| P/FCF | 19.56 | ||
| P/OCF | 11.53 | ||
| P/B | 1.2 | ||
| P/tB | 1.95 | ||
| EV/EBITDA | 11.95 |
EPS(TTM)3.75
EY6.3%
EPS(NY)5.69
Fwd EY9.57%
FCF(TTM)3.04
FCFY5.11%
OCF(TTM)5.16
OCFY8.67%
SpS57.03
BVpS49.44
TBVpS30.55
PEG (NY)1.2
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.56% | ||
| ROE | 1.82% | ||
| ROCE | 1.82% | ||
| ROIC | 1.45% | ||
| ROICexc | 1.8% | ||
| ROICexgc | 2.46% | ||
| OM | 4.73% | ||
| PM (TTM) | 1.58% | ||
| GM | N/A | ||
| FCFM | 5.33% |
ROA(3y)3.53%
ROA(5y)4.44%
ROE(3y)10.54%
ROE(5y)12.36%
ROIC(3y)4.98%
ROIC(5y)5.75%
ROICexc(3y)5.59%
ROICexc(5y)6.51%
ROICexgc(3y)7.12%
ROICexgc(5y)8.32%
ROCE(3y)6.23%
ROCE(5y)7.2%
ROICexcg growth 3Y-22.42%
ROICexcg growth 5Y-9.42%
ROICexc growth 3Y-22.8%
ROICexc growth 5Y-9.59%
OM growth 3Y-14.08%
OM growth 5Y-3.91%
PM growth 3Y-28.37%
PM growth 5Y-15.24%
GM growth 3YN/A
GM growth 5YN/A
F-Score4
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 8.7 | ||
| Debt/EBITDA | 5.65 | ||
| Cap/Depr | 106.34% | ||
| Cap/Sales | 3.71% | ||
| Interest Coverage | 1.92 | ||
| Cash Conversion | 110.03% | ||
| Profit Quality | 337.5% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score4
WACC8.35%
ROIC/WACC0.17
Cap/Depr(3y)132.44%
Cap/Depr(5y)111.37%
Cap/Sales(3y)3.15%
Cap/Sales(5y)2.55%
Profit Quality(3y)108.33%
Profit Quality(5y)115.66%
High Growth Momentum
Growth
EPS 1Y (TTM)-14.97%
EPS 3Y-12.14%
EPS 5Y-3.88%
EPS Q2Q%9.84%
EPS Next Y13.25%
EPS Next 2Y23.19%
EPS Next 3Y19.53%
EPS Next 5YN/A
Revenue 1Y (TTM)-8.8%
Revenue growth 3Y-5.38%
Revenue growth 5Y0.87%
Sales Q2Q%-14.4%
Revenue Next Year-0.42%
Revenue Next 2Y7.43%
Revenue Next 3Y6.89%
Revenue Next 5YN/A
EBIT growth 1Y-54.09%
EBIT growth 3Y-18.7%
EBIT growth 5Y-3.07%
EBIT Next Year21.59%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-50.92%
FCF growth 3Y-54.59%
FCF growth 5Y-33.03%
OCF growth 1Y-39.43%
OCF growth 3Y-31.13%
OCF growth 5Y-14.89%