Does Surging Commercial Growth and Q3 Turnaround Alter the Bull Case for First American Financial (FAF)?

• First American Financial Corporation in October reported strong third quarter 2025 results, with revenue rising to US$1.98 billion and net income reaching US$189.6 million, reversing a net loss from the previous year.
• Company management highlighted that significant growth in commercial transactions, particularly in industrial and multifamily sectors, helped offset continued softness in the residential market.
• We’ll now explore how the surge in commercial segment growth may reshape First American Financial’s investment narrative and future prospects.

The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 26 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement.

First American Financial Investment Narrative Recap

For shareholders of First American Financial, belief in the company’s recovery story hinges on commercial segment outperformance balancing softness in residential real estate, while watching for margin shifts as commercial activity normalizes. This quarter’s robust results extended that narrative, but the main near-term catalyst, continued exceptional commercial transaction volumes, could remain sensitive to cyclical turnarounds; meanwhile, persistent weakness in residential transactions remains the leading risk, though the latest results mostly reinforce, not upend, the existing outlook.

Among recent announcements, the October update on share repurchases stands out: First American had completed the buyback of 6.57% of its shares for US$376.95 million under the existing program. While no new shares were repurchased in the most recent quarter, this underscores management’s ongoing capital return to shareholders at a time when commercial-driven margins are under scrutiny as a key catalyst.

In contrast, investors should be aware that as the commercial segment’s extraordinary strength reverts to historical trends, margin compression risk may...

Read the full narrative on First American Financial (it's free!)

First American Financial's narrative projects $8.7 billion in revenue and $888.8 million in earnings by 2028. This requires 10.2% yearly revenue growth and a $700 million earnings increase from $188.7 million today.

Uncover how First American Financial's forecasts yield a $78.50 fair value, a 26% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community contributors provided three very different fair value estimates, with targets ranging from US$16.19 to US$78.50. With such wide-ranging opinions, especially given the reliance on commercial segment momentum as a catalyst, it is clear that perspectives on future performance vary greatly, read on to explore how others view this stock’s prospects.

Explore 3 other fair value estimates on First American Financial - why the stock might be worth less than half the current price!

Build Your Own First American Financial Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your First American Financial research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.
• Our free First American Financial research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate First American Financial's overall financial health at a glance.

Seeking Other Investments?

Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay:

• Find companies with promising cash flow potential yet trading below their fair value.
• AI is about to change healthcare. These 33 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• We've found 22 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com