FIRST AMERICAN FINANCIAL (FAF) Stock Fundamental Analysis
NYSE:FAF - New York Stock Exchange, Inc. - US31847R1023 - Common Stock - Currency: USD
We assign a fundamental rating of 3 out of 10 to FAF. FAF was compared to 144 industry peers in the Insurance industry. Both the profitability and financial health of FAF have multiple concerns. FAF has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
FAF had positive earnings in the past year.
In the past year FAF had a positive cash flow from operations.
Each year in the past 5 years FAF has been profitable.
FAF had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
The Return On Assets of FAF (0.56%) is worse than 68.31% of its industry peers.
FAF's Return On Equity of 1.82% is on the low side compared to the rest of the industry. FAF is outperformed by 73.94% of its industry peers.
Looking at the Return On Invested Capital, with a value of 1.44%, FAF is in line with its industry, outperforming 46.48% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.56% | ||
| ROE | 1.82% | ||
| ROIC | 1.44% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
FAF has a worse Profit Margin (1.58%) than 72.54% 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: 69.72% 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-33.45%
OM growth 5Y-19.67%
PM growth 3Y-46.08%
PM growth 5Y-28.45%
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.
FAF has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
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.
FAF has a worse Debt to FCF ratio (8.70) than 71.13% 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/WACC0.18
WACC8.12%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 17.60% over the past year.
The Earnings Per Share has been decreasing by -5.20% on average over the past years.
FAF shows a decrease in Revenue. In the last year, the revenue decreased by -0.41%.
FAF shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -0.24% yearly.
EPS 1Y (TTM)17.6%
EPS 3Y-18.68%
EPS 5Y-5.2%
EPS Q2Q%95.65%
Revenue 1Y (TTM)-0.41%
Revenue growth 3Y-12.33%
Revenue growth 5Y-0.24%
Sales Q2Q%17.64%
3.2 Future
The Earnings Per Share is expected to grow by 17.90% on average over the next years. This is quite good.
The Revenue is expected to grow by 9.89% on average over the next years. This is quite good.
EPS Next Y17.22%
EPS Next 2Y18.81%
EPS Next 3Y17.9%
EPS Next 5YN/A
Revenue Next Year16.94%
Revenue Next 2Y13.5%
Revenue Next 3Y9.89%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
Based on the Price/Earnings ratio of 14.57, the valuation of FAF can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of FAF is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 29.62. FAF is valued rather cheaply when compared to this.
FAF is valuated correctly with a Price/Forward Earnings ratio of 12.43.
FAF's Price/Forward Earnings ratio is in line with the industry average.
FAF's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.70.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.57 | ||
| Fwd PE | 12.43 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as FAF.
62.68% of the companies in the same industry are cheaper than FAF, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.13 | ||
| EV/EBITDA | 13.06 |
4.3 Compensation for Growth
FAF's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
FAF's earnings are expected to grow with 17.90% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.85
PEG (5Y)N/A
EPS Next 2Y18.81%
EPS Next 3Y17.9%
5. Dividend
5.1 Amount
FAF has a Yearly Dividend Yield of 3.42%.
Compared to an average industry Dividend Yield of 3.17, FAF pays a bit more dividend than its industry peers.
FAF's Dividend Yield is rather good when compared to the S&P500 average which is at 2.27.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
5.2 History
The dividend of FAF has a limited annual growth rate of 5.50%.
FAF has paid a dividend for at least 10 years, which is a reliable track record.
FAF has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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.
The dividend of FAF is growing, but earnings are growing more, so the dividend growth is sustainable.
DP236.75%
EPS Next 2Y18.81%
EPS Next 3Y17.9%
NYSE:FAF (2/24/2025, 2:55:13 PM)
64.26
+0.84 (+1.32%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.37%
Inst Owner Change-89.93%
Ins Owners1.19%
Ins Owner Change-5.87%
Market Cap6.62B
Analysts76
Price Target77.72 (20.95%)
Short Float %1.11%
Short Ratio2.29
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
Yearly Dividend2.1
Dividend Growth(5Y)5.5%
DP236.75%
Div Incr Years14
Div Non Decr Years14
Ex-Date
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)-0.26%
PT rev (3m)-0.26%
EPS NQ rev (1m)-3.39%
EPS NQ rev (3m)-3.39%
EPS NY rev (1m)-9.17%
EPS NY rev (3m)-10.15%
Revenue NQ rev (1m)-2.27%
Revenue NQ rev (3m)-2.27%
Revenue NY rev (1m)-0.47%
Revenue NY rev (3m)-3.15%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.57 | ||
| Fwd PE | 12.43 | ||
| P/S | 1.13 | ||
| P/FCF | 21.13 | ||
| P/OCF | 12.46 | ||
| P/B | 1.3 | ||
| P/tB | 2.1 | ||
| EV/EBITDA | 13.06 |
EPS(TTM)4.41
EY6.86%
EPS(NY)5.17
Fwd EY8.04%
FCF(TTM)3.04
FCFY4.73%
OCF(TTM)5.16
OCFY8.03%
SpS57.03
BVpS49.44
TBVpS30.55
PEG (NY)0.85
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.56% | ||
| ROE | 1.82% | ||
| ROCE | 1.82% | ||
| ROIC | 1.44% | ||
| ROICexc | 1.79% | ||
| ROICexgc | 2.44% | ||
| OM | 4.73% | ||
| PM (TTM) | 1.58% | ||
| GM | N/A | ||
| FCFM | 5.33% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y-33.45%
OM growth 5Y-19.67%
PM growth 3Y-46.08%
PM growth 5Y-28.45%
GM growth 3YN/A
GM growth 5YN/A
F-Score5
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-Score5
WACC8.12%
ROIC/WACC0.18
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)17.6%
EPS 3Y-18.68%
EPS 5Y-5.2%
EPS Q2Q%95.65%
EPS Next Y17.22%
EPS Next 2Y18.81%
EPS Next 3Y17.9%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.41%
Revenue growth 3Y-12.33%
Revenue growth 5Y-0.24%
Sales Q2Q%17.64%
Revenue Next Year16.94%
Revenue Next 2Y13.5%
Revenue Next 3Y9.89%
Revenue Next 5YN/A
EBIT growth 1Y-54.09%
EBIT growth 3Y-41.66%
EBIT growth 5Y-19.86%
EBIT Next Year203.64%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-14.59%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-17.39%
OCF growth 3YN/A
OCF growth 5YN/A