NYSE:FAF

Stock Analysis Report

First American Financial

Executive Summary

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


Snowflake Analysis

Solid track record established dividend payer.


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

Stable Share Price: FAF's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

3.1%

FAF

1.2%

US Insurance

2.4%

US Market


1 Year Return

-21.4%

FAF

-20.0%

US Insurance

-10.0%

US Market

Return vs Industry: FAF underperformed the US Insurance industry which returned -20% over the past year.

Return vs Market: FAF underperformed the US Market which returned -10% over the past year.


Shareholder returns

FAFIndustryMarket
7 Day3.1%1.2%2.4%
30 Day-28.9%-18.7%-11.0%
90 Day-28.3%-28.8%-19.4%
1 Year-19.1%-21.4%-18.0%-20.0%-8.1%-10.0%
3 Year20.2%9.8%-6.2%-13.6%17.3%9.6%
5 Year36.3%17.3%17.2%2.9%36.1%21.1%

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?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FAF ($42.25) is trading below our estimate of fair value ($103.79)

Significantly Below Fair Value: FAF is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FAF is good value based on its PE Ratio (6.8x) compared to the Insurance industry average (8.5x).

PE vs Market: FAF is good value based on its PE Ratio (6.8x) compared to the US market (13x).


Price to Earnings Growth Ratio

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 (1.1x) compared to the US Insurance industry average (0.8x).


Next Steps

Future Growth

How is First American Financial forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

-13.3%

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 (-13.3% per year).

Earnings vs Market: FAF's earnings are forecast to decline over the next 3 years (-13.3% per year).

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

Revenue vs Market: FAF's revenue is expected to decline over the next 3 years (-0.01% per year).

High Growth Revenue: FAF's revenue is forecast to decline over the next 3 years (-0.01% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FAF's Return on Equity is forecast to be low in 3 years time (11.6%).


Next Steps

Past Performance

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

19.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FAF has high quality earnings.

Growing Profit Margin: FAF's current net profit margins (11.4%) are higher than last year (8.3%).


Past Earnings Growth Analysis

Earnings Trend: FAF's earnings have grown by 19.3% per year over the past 5 years.

Accelerating Growth: FAF's earnings growth over the past year (49.1%) exceeds its 5-year average (19.3% per year).

Earnings vs Industry: FAF earnings growth over the past year (49.1%) exceeded the Insurance industry 43.7%.


Return on Equity

High ROE: FAF's Return on Equity (16%) is considered low.


Next Steps

Financial Health

How is First American Financial's financial position?


Financial Position Analysis

Short Term Liabilities: FAF's short term assets ($2.2B) do not cover its short term liabilities ($4.8B).

Long Term Liabilities: FAF's short term assets ($2.2B) do not cover its long term liabilities ($2.3B).


Debt to Equity History and Analysis

Debt Level: FAF's debt to equity ratio (22.6%) is considered satisfactory.

Reducing Debt: FAF's debt to equity ratio has reduced from 22.8% to 22.6% over the past 5 years.

Debt Coverage: FAF's debt is well covered by operating cash flow (91.1%).

Interest Coverage: FAF's interest payments on its debt are well covered by EBIT (19.9x coverage).


Balance Sheet


Next Steps

Dividend

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

4.17%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FAF's dividend (4.17%) is higher than the bottom 25% of dividend payers in the US market (1.93%).

High Dividend: FAF's dividend (4.17%) is low compared to the top 25% of dividend payers in the US market (5.46%).


Stability and Growth of Payments

Stable Dividend: FAF's dividends per share have been stable in the past 10 years.

Growing Dividend: FAF's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (26.9%), 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 (33.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

8.3yrs

Average management tenure


CEO

Dennis Gilmore (61yo)

9.83s

Tenure

US$10,367,225

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 ($USD10.37M) is above average for companies of similar size in the US market ($USD5.63M).

Compensation vs Earnings: Dennis's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Dennis Gilmore
CEO & Director9.83yrsUS$10.37m0.33% $15.8m
Mark Seaton
Executive VP & CFO7.08yrsUS$3.50m0.052% $2.5m
Matthew Wajner
VP & Chief Accounting Officer7.08yrsUS$795.68k0.010% $475.8k
Kenneth DeGiorgio
Executive Vice President9.83yrsUS$5.23m0.33% $15.8m
Christopher Leavell
Chief Operating Officer of First American Title Insurance Company8.33yrsUS$5.28m0.040% $1.9m
Craig Barberio
Director of Investor Relations10.25yrsno datano data
Mark Rutherford
Senior Vice President of Human Resources12.25yrsno datano data
George Livermore
Executive Vice President of Data and Mortgage Solutionsno datano datano data
Mark Fleming
Chief Economist5.42yrsno datano data
Dianna Serio
Senior Vice President of Enterprise Data Strategy5.42yrsno datano data

8.3yrs

Average Tenure

52yo

Average Age

Experienced Management: FAF's management team is seasoned and experienced (8.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Dennis Gilmore
CEO & Director9.83yrsUS$10.37m0.33% $15.8m
Parker Kennedy
Independent Chairman of the Board9.83yrsUS$400.00k2.35% $112.2m
Mark Oman
Independent Director7.08yrsUS$242.00k0.028% $1.4m
Michael McKee
Independent Director9.08yrsUS$245.00k0.034% $1.6m
James Doti
Lead Independent Directorno dataUS$282.00k0.054% $2.6m
Thomas McKernan
Independent Director9.08yrsUS$235.12k0.041% $1.9m
Martha Wyrsch
Independent Director1.92yrsUS$228.00k0.0034% $161.8k
Margaret McCarthy
Independent Director4.83yrsUS$241.12k0.015% $693.9k
Reginald Gilyard
Independent Director2.92yrsUS$228.00k0.0051% $244.4k

8.1yrs

Average Tenure

65yo

Average Age

Experienced Board: FAF's board of directors are considered experienced (8.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

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$4.773b
  • Shares outstanding: 112.96m
  • Website: https://www.firstam.com

Number of Employees


Location

  • First American Financial Corporation
  • 1 First American Way
  • Santa Ana
  • California
  • 92707-5913
  • 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 Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services. This segment also provides closing and/or escrow services; products and services involving the use of real property related data to mitigate risk or facilitates real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, and title evidence services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant records and images. This segment offers its products through a network of direct operations and agents in 49 states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, South Korea, and internationally. The Specialty Insurance segment provides property and casualty insurance comprising coverage to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism, and other types of property damage. It also offers residential service contracts that cover residential systems, such as heating and air conditioning systems, and appliances against failures that occur as the result of normal usage during the coverage period; and auto insurance products. This segment markets its property and casualty insurance products through direct distribution channels, including marketing through its existing closing-service activities, as well as through a network of independent brokers in 36 states. First American Financial Corporation was founded in 1889 and is headquartered in Santa Ana, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/08 09:03
End of Day Share Price2020/04/07 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.