NYSE:FAF

Stock Analysis Report

First American Financial

Executive Summary

First American Financial Corporation, through its subsidiaries, provides financial services.

Snowflake

Fundamentals

Proven track record and fair value.


Similar Companies

Share Price & News

How has First American Financial's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

1.2%

FAF

0.7%

US Insurance

1.8%

US Market


1 Year Return

29.9%

FAF

13.5%

US Insurance

7.3%

US Market

Return vs Industry: FAF exceeded the US Insurance industry which returned 13.5% over the past year.

Return vs Market: FAF exceeded the US Market which returned 7.3% over the past year.


Shareholder returns

FAFIndustryMarket
7 Day1.2%0.7%1.8%
30 Day3.1%-2.2%-0.7%
90 Day8.3%-2.0%0.06%
1 Year34.2%29.9%16.3%13.5%9.7%7.3%
3 Year68.2%53.0%43.7%32.7%46.3%36.9%
5 Year134.2%101.3%70.9%50.5%64.5%46.5%

Price Volatility Vs. Market

How volatile is First American Financial's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is First American Financial undervalued compared to its fair value and its price relative to the market?

31.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: FAF ($59.75) is trading below our estimate of fair value ($86.58)

Significantly Undervalued: FAF is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FAF is good value based on its PE Ratio (12.5x) compared to the Insurance industry average (15.6x).

PE vs Market: FAF is good value based on its PE Ratio (12.5x) compared to the US market (17.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: FAF's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: FAF is overvalued based on its PB Ratio (1.6x) compared to the US Insurance industry average (1.2x).


Next Steps

Future Growth

How is First American Financial forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-1.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FAF's earnings are forecast to decline over the next 3 years (-1.5% per year).

Earnings vs Market: FAF's earnings are forecast to decline over the next 3 years (-1.5% per year).

High Growth Earnings: FAF's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FAF's revenue (2% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: FAF's revenue (2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: FAF's Return on Equity is forecast to be low in 3 years time (12.5%).


Next Steps

Past Performance

How has First American Financial performed over the past 5 years?

19.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: FAF's earnings have grown by 19.1% per year over the past 5 years.

Accelerating Growth: FAF's earnings growth over the past year (13.8%) is below its 5-year average (19.1% per year).

Earnings vs Industry: FAF earnings growth over the past year (13.8%) exceeded the Insurance industry 1.4%.


Return on Equity

High ROE: FAF's Return on Equity (13.3%) is considered low.


Return on Assets

ROA vs Industry: FAF has a higher Return on Assets than the Insurance industry average last year.


Return on Capital Employed

ROCE Improving: FAF has improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is First American Financial's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: FAF has a low level of unsold assets or inventory.

Debt Coverage by Assets: FAF's debt is covered by short term assets (assets are 2.164520x debt).


Financial Institutions Analysis

Asset Level: FAF's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if FAF has a sufficient allowance for bad loans.

Low Risk Liabilities: FAF reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if FAF has an acceptable proportion of non-loan assets held.

Low Risk Deposits: FAF has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if FAF has an appropriate level of bad loans.


Next Steps

Dividend

What is First American Financial's current dividend yield, its reliability and sustainability?

2.81%

Current Dividend Yield


Dividend Yield vs Market

company2.8%marketbottom25%1.5%markettop25%3.7%industryaverage2.4%forecastin3Years3.0%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: FAF's dividend (2.81%) is higher than the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: FAF's dividend (2.81%) is low compared to the top 25% of dividend payers in the US market (3.72%).

Stable Dividend: Whilst dividend payments have been stable, FAF has been paying a dividend for less than 10 years.

Growing Dividend: FAF's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.2%), FAF's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FAF's dividends in 3 years are forecast to be well covered by earnings (36.4% payout ratio).


Next Steps

Management

What is the CEO of First American Financial's salary, the management and board of directors tenure and is there insider trading?

7.8yrs

Average management tenure


CEO

Dennis Gilmore (61yo)

9.3yrs

Tenure

US$8,402,957

Compensation

Mr. Dennis Joseph Gilmore is Chief Executive Officer of First American Financial Corporation (also known as Financial Services Group). Mr. Gilmore is Chief Executive Officer, President and Director of Firs ...


CEO Compensation Analysis

Compensation vs. Market: Dennis's total compensation ($USD8.40M) is about average for companies of similar size in the US market ($USD6.79M).

Compensation vs Earnings: Dennis's compensation has been consistent with company performance over the past year.


Management Age and Tenure

7.8yrs

Average Tenure

52yo

Average Age

Experienced Management: FAF's management team is seasoned and experienced (7.8 years average tenure).


Board Age and Tenure

7.6yrs

Average Tenure

65yo

Average Age

Experienced Board: FAF's board of directors are considered experienced (7.6 years average tenure).


Insider Trading

Insider Buying: FAF insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$580,27831 Jul 19
Christopher Leavell
EntityIndividual
Role
Other Key Executive
Chief Operating Officer of First American Title Insurance Company
Shares10,006
Max PriceUS$57.99
SellUS$1,918,33416 May 19
Christopher Leavell
EntityIndividual
Role
Other Key Executive
Chief Operating Officer of First American Title Insurance Company
Shares35,235
Max PriceUS$54.44
SellUS$1,519,50602 May 19
Kenneth DeGiorgio
EntityIndividual
Role
Senior Key Executive
Executive Vice President
Shares26,658
Max PriceUS$57.00
SellUS$81,53330 Apr 19
Kenneth DeGiorgio
EntityIndividual
Role
Senior Key Executive
Executive Vice President
Shares1,400
Max PriceUS$58.24
SellUS$220,50705 Mar 19
Kenneth DeGiorgio
EntityIndividual
Role
Senior Key Executive
Executive Vice President
Shares4,312
Max PriceUS$51.14
SellUS$360,14601 Mar 19
Kenneth DeGiorgio
EntityIndividual
Role
Senior Key Executive
Executive Vice President
Shares7,052
Max PriceUS$51.07
SellUS$730,44727 Feb 19
Kenneth DeGiorgio
EntityIndividual
Role
Senior Key Executive
Executive Vice President
Shares14,177
Max PriceUS$51.53

Ownership Breakdown


Management Team

  • Mark Seaton (41yo)

    Executive VP & CFO

    • Tenure: 6.6yrs
    • Compensation: US$3.16m
  • Christopher Leavell (56yo)

    Chief Operating Officer of First American Title Insurance Company

    • Tenure: 7.8yrs
    • Compensation: US$3.92m
  • Ken DeGiorgio (48yo)

    Executive Vice President

    • Tenure: 9.3yrs
    • Compensation: US$4.09m
  • George Livermore (58yo)

    Executive Vice President of Data and Mortgage Solutions

    • Tenure: 0yrs
  • Dennis Gilmore (61yo)

    CEO & Director

    • Tenure: 9.3yrs
    • Compensation: US$8.40m
  • Mark Fleming

    Chief Economist

    • Tenure: 4.9yrs
  • Craig Barberio

    Director of Investor Relations

    • Tenure: 9.8yrs
  • Mark Rutherford

    Senior Vice President of Human Resources

    • Tenure: 11.8yrs
  • Matthew Wajner (43yo)

    VP & Chief Accounting Officer

    • Tenure: 6.6yrs
    • Compensation: US$689.31k
  • Dianna Serio

    Senior Vice President of Enterprise Data Strategy

    • Tenure: 4.9yrs

Board Members

  • Park Kennedy (71yo)

    Independent Chairman of the Board

    • Tenure: 9.3yrs
    • Compensation: US$369.98k
  • Mark Oman (64yo)

    Independent Director

    • Tenure: 6.6yrs
    • Compensation: US$211.98k
  • Mike McKee (73yo)

    Independent Director

    • Tenure: 8.6yrs
    • Compensation: US$224.98k
  • James Doti (73yo)

    Lead Independent Director

    • Tenure: 0yrs
    • Compensation: US$263.98k
  • Thomas McKernan (74yo)

    Independent Director

    • Tenure: 8.6yrs
    • Compensation: US$201.98k
  • Martha Wyrsch (61yo)

    Independent Director

    • Tenure: 1.4yrs
    • Compensation: US$126.95k
  • Dennis Gilmore (61yo)

    CEO & Director

    • Tenure: 9.3yrs
    • Compensation: US$8.40m
  • Meg McCarthy (65yo)

    Independent Director

    • Tenure: 4.3yrs
    • Compensation: US$204.50k
  • Reggie Gilyard (55yo)

    Independent Director

    • Tenure: 2.4yrs
    • Compensation: US$197.98k

Company Information

First American Financial Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: First American Financial Corporation
  • Ticker: FAF
  • Exchange: NYSE
  • Founded: 1889
  • Industry: Property and Casualty Insurance
  • Sector: Insurance
  • Market Cap: US$6.698b
  • Shares outstanding: 112.10m
  • Website: https://www.firstam.com

Number of Employees


Location

  • First American Financial Corporation
  • 1 First American Way
  • Santa Ana
  • California
  • 92707
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FAFNYSE (New York Stock Exchange)YesCommon SharesUSUSDMay 2010
Y1FDB (Deutsche Boerse AG)YesCommon SharesDEEURMay 2010

Biography

First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Specialty Insurance segments. The Title Insurance and Serv ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/18 00:15
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.