We’ve recently updated our valuation analysis.

First American Financial Valuation

Is FAF undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FAF?

Other financial metrics that can be useful for relative valuation.

FAF key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.6x
Enterprise Value/EBITDA6.3x
PEG Ratio0.5x

Price to Earnings Ratio vs Peers

How does FAF's PE Ratio compare to its peers?

The above table shows the PE ratio for FAF vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average15.2x
RLI RLI
10x-48.4%US$5.8b
SIGI Selective Insurance Group
24.3x35.9%US$5.5b
THG Hanover Insurance Group
17.5x32.1%US$5.1b
ORI Old Republic International
8.9x7.5%US$7.1b
FAF First American Financial
11.4x21.3%US$5.3b

Price-To-Earnings vs Peers: FAF is good value based on its Price-To-Earnings Ratio (11.4x) compared to the peer average (15.2x).


Price to Earnings Ratio vs Industry

How does FAF's PE Ratio compare vs other companies in the US Insurance Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a23.1%
n/an/an/a

Price-To-Earnings vs Industry: FAF is good value based on its Price-To-Earnings Ratio (11.4x) compared to the US Insurance industry average (14.6x)


Price to Earnings Ratio vs Fair Ratio

What is FAF's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FAF PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio11.4x
Fair PE Ratio16.2x

Price-To-Earnings vs Fair Ratio: FAF is good value based on its Price-To-Earnings Ratio (11.4x) compared to the estimated Fair Price-To-Earnings Ratio (16.2x).


Share Price vs Fair Value

What is the Fair Price of FAF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FAF ($51.57) is trading below our estimate of fair value ($131.34)

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


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst FAF forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUS$51.57
US$59.40
+15.2%
11.6%US$67.00US$47.00n/a5
Nov ’23US$50.44
US$63.20
+25.3%
18.7%US$83.00US$47.00n/a5
Oct ’23US$46.10
US$70.60
+53.1%
11.7%US$83.00US$60.00n/a5
Sep ’23US$53.26
US$71.67
+34.6%
11.0%US$83.00US$60.00n/a6
Aug ’23US$58.32
US$71.67
+22.9%
11.0%US$83.00US$60.00n/a6
Jul ’23US$54.07
US$76.33
+41.2%
12.6%US$87.00US$60.00n/a6
Jun ’23US$59.61
US$78.67
+32.0%
8.3%US$87.00US$69.00n/a6
May ’23US$58.31
US$78.67
+34.9%
8.3%US$87.00US$69.00n/a6
Apr ’23US$62.82
US$85.67
+36.4%
7.9%US$93.00US$74.00n/a6
Mar ’23US$65.38
US$89.50
+36.9%
6.1%US$97.00US$80.00n/a6
Feb ’23US$74.50
US$88.67
+19.0%
6.8%US$97.00US$79.00n/a6
Jan ’23US$78.23
US$82.40
+5.3%
4.1%US$87.00US$78.00n/a5
Dec ’22US$74.16
US$82.40
+11.1%
4.1%US$87.00US$78.00US$54.085
Nov ’22US$72.91
US$82.40
+13.0%
4.1%US$87.00US$78.00US$50.445
Oct ’22US$67.31
US$77.20
+14.7%
3.8%US$82.00US$73.00US$46.105
Sep ’22US$70.26
US$77.00
+9.6%
4.2%US$82.00US$72.00US$53.265
Aug ’22US$67.31
US$77.00
+14.4%
4.2%US$82.00US$72.00US$58.325
Jul ’22US$63.08
US$74.60
+18.3%
3.5%US$78.00US$71.00US$54.075
Jun ’22US$64.88
US$74.60
+15.0%
3.5%US$78.00US$71.00US$59.615
May ’22US$64.50
US$73.75
+14.3%
2.9%US$77.00US$71.00US$58.314
Apr ’22US$57.44
US$68.75
+19.7%
4.9%US$73.00US$65.00US$62.824
Mar ’22US$54.04
US$68.40
+26.6%
4.5%US$73.00US$65.00US$65.385
Feb ’22US$53.52
US$64.20
+20.0%
7.8%US$69.00US$55.00US$74.505
Jan ’22US$51.63
US$63.60
+23.2%
7.4%US$69.00US$55.00US$78.235
Dec ’21US$48.64
US$62.80
+29.1%
6.4%US$66.00US$55.00US$74.165

Analyst Forecast: Target price is less than 20% higher than the current share price.


Discover undervalued companies