NOT FOR DISTRIBUTION
Header cover image

First American Financial

Market Cap

US$7.3b

Last Updated

2021/05/08 23:20 UTC

Data Sources

Company Financials +

Executive Summary

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


Snowflake Analysis

Solid track record, good value and pays a dividend.


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 is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: FAF's weekly volatility (4%) has been stable over the past year.


Market Performance


7 Day Return

3.1%

FAF

3.2%

US Insurance

-0.3%

US Market


1 Year Return

41.4%

FAF

56.3%

US Insurance

50.2%

US Market

Return vs Industry: FAF underperformed the US Insurance industry which returned 60.2% over the past year.

Return vs Market: FAF underperformed the US Market which returned 51.8% over the past year.


Shareholder returns

FAFIndustryMarket
7 Day3.1%3.2%-0.3%
30 Day11.7%7.8%2.2%
90 Day21.7%17.7%3.8%
1 Year46.4%41.4%60.4%56.3%52.7%50.2%
3 Year35.4%23.1%43.8%33.1%63.4%53.1%
5 Year109.6%78.9%89.3%65.9%129.6%104.0%

Long-Term 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 ($66.51) is trading below our estimate of fair value ($137.56)

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 (8.6x) compared to the US Insurance industry average (13.3x).

PE vs Market: FAF is good value based on its PE Ratio (8.6x) compared to the US market (20.2x).


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 (1.5x) compared to the US Insurance industry average (1.2x).


Future Growth

How is First American Financial forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

-14.8%

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 (-14.8% per year).

Earnings vs Market: FAF's earnings are forecast to decline over the next 3 years (-14.8% 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 (-5.5% per year).

High Growth Revenue: FAF's revenue is forecast to decline over the next 3 years (-5.5% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if FAF's Return on Equity is forecast to be high in 3 years time


Past Performance

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

19.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FAF has high quality earnings.

Growing Profit Margin: FAF's current net profit margins (11.3%) are higher than last year (10.5%).


Past Earnings Growth Analysis

Earnings Trend: FAF's earnings have grown by 19.4% per year over the past 5 years.

Accelerating Growth: FAF's earnings growth over the past year (31.1%) exceeds its 5-year average (19.4% per year).

Earnings vs Industry: FAF earnings growth over the past year (31.1%) exceeded the Insurance industry 28.3%.


Return on Equity

High ROE: FAF's Return on Equity (17.5%) is considered low.


Financial Health

How is First American Financial's financial position?


Financial Position Analysis

Short Term Liabilities: FAF's short term assets ($3.2B) do not cover its short term liabilities ($7.6B).

Long Term Liabilities: FAF's short term assets ($3.2B) exceed its long term liabilities ($1.8B).


Debt to Equity History and Analysis

Debt Level: FAF's debt to equity ratio (31.5%) is considered satisfactory.

Reducing Debt: FAF's debt to equity ratio has increased from 20.4% to 31.5% over the past 5 years.

Debt Coverage: FAF's debt is well covered by operating cash flow (82%).

Interest Coverage: FAF's interest payments on its debt are well covered by EBIT (20.6x coverage).


Balance Sheet


Dividend

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

2.77%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FAF's dividend (2.77%) is higher than the bottom 25% of dividend payers in the US market (1.24%).

High Dividend: FAF's dividend (2.77%) is low compared to the top 25% of dividend payers in the US market (3.42%).


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 low payout ratio (23.3%), FAF's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

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

8.8yrs

Average management tenure


CEO

Dennis Gilmore (62 yo)

10.92yrs

Tenure

US$11,173,959

Compensation

Mr. Dennis Joseph Gilmore is Chief Executive Officer of First American Financial Corporation since 2010. Mr. Gilmore is Chief Executive Officer, President and Director of First American Title Insurance Com...


CEO Compensation Analysis

Compensation vs Market: Dennis's total compensation ($USD11.17M) is above average for companies of similar size in the US market ($USD6.50M).

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


Leadership Team

Experienced Management: FAF's management team is seasoned and experienced (8.8 years average tenure).


Board Members

Experienced Board: FAF's board of directors are considered experienced (9.2 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold 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$7.299b
  • Shares outstanding: 109.74m
  • 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


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 Analysis2021/05/08 23:20
End of Day Share Price2021/05/07 00:00
Earnings2021/03/31
Annual Earnings2020/12/31


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.