First Acceptance (FACO) AI Stock Analysis

• Market Cap: $140.40M
• Dividend Yield: N/A
• Average Volume (3M): 9.82K
• Price to Earnings (P/E): 4.8
• Beta (1Y): 0.22
• Revenue Growth: -7.26%
• EPS Growth: -62.71%
• Country: US
• Employees: 633
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Specialty
• EPS (TTM): 0.27
• Shares Outstanding: 38,150,906
• 10 Day Avg. Volume: 7,392
• 30 Day Avg. Volume: 9,824
• PEG Ratio: -0.07
• Price to Book (P/B): 0.68
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 2.23
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 0.34
• Enterprise Value/Gross Profit: 1.17
• Enterprise Value/Ebitda: 5.08
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $4.00 ▲(9.59% Upside)

First Acceptance's stock score is primarily driven by its strong valuation, with a low P/E ratio indicating potential undervaluation. The technical analysis supports a positive short-term trend, although the RSI suggests a neutral position. Financial performance is mixed, with stable profitability but concerns over revenue and cash flow growth. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

Balance Sheet Health

Low leverage with a debt-to-equity ratio of 0.25 suggests financial stability, providing the company with flexibility to invest in growth opportunities.

Profitability Margins

Stable profitability margins indicate effective cost management and pricing strategies, supporting long-term financial health despite revenue challenges.

Cash Generation Efficiency

A high free cash flow to net income ratio demonstrates the company's ability to convert earnings into cash, enhancing its capacity to fund operations and growth.

Negative Factors

Revenue Growth Decline

Declining revenue growth may hinder the company's ability to expand its market presence and compete effectively, impacting future profitability.

Cash Flow Growth Challenges

Decreasing cash flow growth could limit the company's financial flexibility, affecting its ability to invest in strategic initiatives and manage liabilities.

Earnings Growth Decline

A sharp decline in EPS growth suggests potential operational inefficiencies or market challenges, which could undermine investor confidence and long-term growth prospects.

First Acceptance Business Overview & Revenue Model

Company Description

First Acceptance Corporation, together with its subsidiaries, operates as a retailer, servicer, and underwriter of non-standard personal automobile insurance and related products in the United States. It issues non-standard automobile insurance policies to individuals based on their inability or unwillingness to obtain insurance coverage from standard carriers due to various factors, including their payment preference, failure to maintain continuous insurance coverage, or driving record. The company also underwrites auto and motorcycle insurance products; and renters, homeowners, commercial, pet, life, travel, outdoor vehicle, and hospital indemnity insurance products. In addition, it provides TeleMed, a subscription service that offers access to doctor for consulting, diagnosing, and prescribing medication for non-emergency illness. The company primarily distributes its products through its retail locations, as well as through call center and internet. As of December 31, 2021, it leased and operated 338 retail locations, and a call center. First Acceptance Corporation was founded in 1969 and is headquartered in Nashville, Tennessee.

How the Company Makes Money

First Acceptance generates revenue primarily through the sale of non-standard auto insurance policies. The company earns premiums from policyholders, which can vary based on individual risk profiles, coverage options, and state regulations. Additionally, FACO may receive income from investment activities, including the management of reserves set aside for future claims. Key revenue streams include direct premiums written, policy renewals, and ancillary services such as installment payment plans. Strategic partnerships with agents and brokers also facilitate sales and distribution, enhancing the company's reach in the competitive insurance market.

First Acceptance Financial Statement Overview

Summary

First Acceptance presents a mixed financial performance. The income statement shows stable profitability margins despite a decline in revenue growth. The balance sheet is strong with low leverage and high return on equity, indicating financial stability. However, the cash flow statement highlights challenges in cash flow growth, which could impact future financial flexibility. The company should focus on improving revenue growth and cash flow generation to strengthen its financial position.

Income Statement

First Acceptance shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) data indicates a decline in revenue growth rate by 3.16%, which is concerning. However, the company maintains a stable gross profit margin of 29.31% and a net profit margin of 4.66%. The EBIT and EBITDA margins are modest at 6.50% and 6.68%, respectively. The company has shown resilience in maintaining profitability despite revenue challenges.

Balance Sheet

The balance sheet reflects a solid financial position with a debt-to-equity ratio of 0.25, indicating low leverage. The return on equity (ROE) is strong at 14.29%, showcasing effective utilization of equity. The equity ratio stands at 22.99%, suggesting a stable capital structure. Overall, the company demonstrates financial stability with manageable debt levels.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth by 11.51% in the TTM period, which is a concern. The operating cash flow to net income ratio is not available, indicating potential issues in cash flow conversion. However, the free cash flow to net income ratio is high at 98.36%, suggesting efficient cash generation relative to net income. The company needs to address cash flow growth to enhance financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	522.23M	559.43M	487.54M	302.30M	285.25M	269.58M
Gross Profit	153.09M	40.53M	33.48M	-15.11M	2.05M	19.30M
EBITDA	35.18M	38.61M	105.40M	-16.32M	999.00K	18.23M
Net Income	24.35M	26.29M	73.91M	-17.49M	-1.23M	10.42M
Balance Sheet
Total Assets	773.35M	680.39M	570.37M	355.94M	322.65M	340.95M
Cash, Cash Equivalents and Short-Term Investments	401.42M	173.08M	302.67M	162.40M	180.49M	195.19M
Total Debt	45.16M	45.40M	46.02M	55.30M	51.97M	52.92M
Total Liabilities	595.55M	510.83M	428.52M	55.30M	51.97M	52.92M
Stockholders Equity	177.79M	169.56M	141.85M	65.52M	92.90M	111.69M
Cash Flow
Free Cash Flow	33.50M	51.79M	83.82M	-8.10M	-10.46M	-1.59M
Operating Cash Flow	34.06M	52.12M	85.16M	-3.89M	-6.60M	497.00K
Investing Cash Flow	-42.76M	-75.53M	-24.53M	-7.22M	34.48M	-18.52M
Financing Cash Flow	-6.32M	-446.00K	83.00K	-642.00K	-15.30M	-7.03M

First Acceptance Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 3.65
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FACO, the sentiment is Neutral. The current price of 3.65 is below the 20-day moving average (MA) of 3.79, above the 50-day MA of 3.54, and above the 200-day MA of 3.43, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 45.57 is Neutral, neither overbought nor oversold. The STOCH value of 19.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FACO.

First Acceptance Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FACO	71 Outperform	$140.40M	4.80	16.45%	―	-7.26%	-62.71%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
EIG	67 Neutral	$843.64M	14.77	5.86%	3.14%	1.69%	-52.43%
HIPO	65 Neutral	$898.26M	-85.19	25.65%	―	34.48%	―
JRVR	54 Neutral	$270.74M	―	-6.97%	0.72%	-19.08%	56.21%
MBI	49 Neutral	$342.31M	-1.48	―	―	―	67.72%
AMBC	48 Neutral	$393.87M	―	-4.14%	―	-37.46%	-117.36%