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First American Financial
(NYSE:FAF)
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Rating:73Outperform
Price Target:
$75.00
â–²(13.64% Upside)
Action:Reiterated
Date:05/16/26
FAF scores well on improving profitability and strong cash flow, reinforced by upbeat earnings-call guidance driven by commercial strength and productivity initiatives. Valuation is also favorable (moderate P/E and solid yield). The score is tempered by mixed technicals and ongoing revenue/volume volatility tied to a weaker residential purchase market and higher operating costs.
Positive Factors
Strong cash generation
Consistent, sizable operating and free cash flow gives the company durable financial flexibility to fund technology investments, repay obligations, and return capital. An FCF base near $0.8B supports strategic initiatives and buybacks even if top-line cycles persist, improving long-term resilience.
Negative Factors
Top-line cyclicality
Revenue swings driven by real estate cycles expose earnings to macro and rate volatility. Large TTM revenue declines highlight that profitability gains can quickly reverse if transaction volumes fall, making long-run earnings and growth dependent on housing market recovery.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistent, sizable operating and free cash flow gives the company durable financial flexibility to fund technology investments, repay obligations, and return capital. An FCF base near $0.8B supports strategic initiatives and buybacks even if top-line cycles persist, improving long-term resilience.
Read all positive factors
First American Financial Key Performance Indicators (KPIs)
Any
Revenue By Segment
Breaks down sales figures by business unit, providing insight into which areas are contributing most to overall revenue and where there might be potential for expansion or risk.
Breaks down sales figures by business unit, providing insight into which areas are contributing most to overall revenue and where there might be potential for expansion or risk.
Data provided by:
The Fly
The FlyFirst American Financial (FAF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.99B
Dividend Yield3.58%
Average Volume (3M)929.80K
Price to Earnings (P/E)10.6
Beta (1Y)0.67
Revenue Growth27.63%
EPS Growth328.74%
CountryUS
Employees19,038
SectorFinancial
Sector Strength70
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)6.52
Shares Outstanding101,900,000
10 Day Avg. Volume1,172,169
30 Day Avg. Volume929,804
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)1.15
Price to Sales (P/S)0.85
P/FCF Ratio8.32
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue1.03
Enterprise Value/Gross Profit1.39
Enterprise Value/Ebitda4.89
Forecast
1Y Price Target
$85.60Price Target Upside29.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)6.68
Revenue Forecast (FY)$8.00B
First American Financial Business Overview & Revenue Model
Company Description
First American Financial Corporation (FAF) delivers financial services primarily through its diverse subsidiaries. The company's operations are divided into two main divisions: Title Insurance and Services, and Specialty Insurance. The Title Insur...
How the Company Makes Money
FAF primarily makes money through its Title Insurance and Services business by earning (1) title insurance premiums and (2) fees for settlement/closing and escrow services tied to real estate purchase and refinance transactions. Title insurance re...
First American Financial Earnings Call Summary
Earnings Call Date:Apr 22, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 22, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational momentum led by outsized commercial performance, robust AI-driven transformation progress, and healthy deposit and investment income growth. Many core metrics improved materially (adjusted EPS +58%, commercial revenue +48%, data centers +76%, energy +250%), and management is aggressively scaling internal AI platforms and deploying capital via opportunistic buybacks. Key near-term headwinds include continued weakness in the residential purchase market (purchase revenue -4%), higher operating and interest costs, and that several AI automation gains are still early-stage and will take multiple quarters/years to fully realize. On balance, the positive financial results, strategic initiatives, and sizable commercial tailwinds outweigh the operational and market challenges noted.Positive Updates
Adjusted EPS Growth
Adjusted earnings per share of $1.33 in Q1 2026, a 58% increase year-over-year (GAAP EPS $1.21).
Negative Updates
Purchase Revenue and Volume Weakness
Residential purchase revenue declined 4% YoY; closed purchase orders fell ~6% YoY and open purchase orders were down ~3% in April, reflecting continued softness in home sale activity.
Read all updates
Q1-2026 Updates
Positive
Negative
Adjusted EPS Growth
Adjusted earnings per share of $1.33 in Q1 2026, a 58% increase year-over-year (GAAP EPS $1.21).
Read all positive updates
Company Guidance
The company guided to an optimistic earnings trajectory, saying 2026 should be a record year in commercial while remaining cautious on purchase activity (Q1 adjusted EPS $1.33, +58% Y/Y; GAAP EPS $1.21), noting purchase revenue was down 4% Y/Y and open purchase orders were down ~3% in April, but commercial momentum remains strong (Q1 commercial revenue $271M, +48% Y/Y; closed orders +9%; average revenue per order +36%; 20 deals >$1M premium, double prior year; opened commercial orders in early April -4% Y/Y). They reiterated tech-driven operational guidance: Endpoint live in Seattle (≈310 orders opened, 150 closed; ~30% task automation today; target ~80–85% branch coverage by end of next year and scale across the network by end of 2027, with ultimate automation goals ~80–90%), SEQUOIA automating 35% of refinances in 8 counties and 13% of purchases in 3 counties with longer‑run targets of ~80% refinance and ~70% purchase decisioning in plant markets and CA/FL expansion by year‑end (national rollout 2027); AI initiatives are boosting QC capacity >6x and cutting ~30 minutes per file, 25% of engineers trained in agentic AI. Other forward items: average deposits $6.8B (+19% Y/Y) with 29% from non‑captive sources (including $1.4B ServiceMac and $300M 1031), 284 agents banking (+26%), title adjusted revenue $1.7B (+17%), pretax title margin 9.6% (10.4% adj), investment income $154M (+12%), and continued disciplined capital deployment including repurchases (556k shares for $33M this quarter and 296k for $18M in April) with ~$248M remaining on the buyback program.First American Financial Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
76
Positive
Cash Flow
80
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.01B | 7.45B | 6.12B | 6.00B | 7.59B | 9.21B |
| Gross Profit | 4.47B | 7.12B | 3.76B | 3.71B | 4.28B | 5.64B |
| EBITDA | 1.27B | 1.20B | 522.40M | 595.40M | 586.20M | 1.87B |
| Net Income | 672.70M | 621.80M | 131.10M | 216.80M | 263.00M | 1.24B |
Balance Sheet | ||||||
| Total Assets | 17.94B | 16.23B | 14.91B | 16.80B | 14.96B | 16.45B |
| Cash, Cash Equivalents and Short-Term Investments | 2.44B | 1.39B | 1.80B | 3.66B | 1.29B | 1.29B |
| Total Debt | 1.75B | 1.91B | 2.42B | 2.19B | 2.28B | 2.46B |
| Total Liabilities | 12.42B | 10.73B | 9.98B | 11.94B | 10.27B | 10.67B |
| Stockholders Equity | 5.49B | 5.50B | 4.91B | 4.85B | 4.66B | 5.77B |
Cash Flow | ||||||
| Free Cash Flow | 824.30M | 762.50M | 679.20M | 90.90M | 520.00M | 1.06B |
| Operating Cash Flow | 1.01B | 950.80M | 897.50M | 354.30M | 780.00M | 1.22B |
| Investing Cash Flow | -2.04B | -1.46B | -458.70M | 599.50M | -395.00M | -3.39B |
| Financing Cash Flow | 1.41B | 164.40M | -2.31B | 1.42B | -376.00M | 2.13B |
First American Financial Technical Analysis
Positive
66.00
Price Trends
67.30
Positive
65.43
Positive
63.55
Positive
Market Momentum
0.45
Negative
55.81
Neutral
59.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FAF, the sentiment is Positive. The current price of 66 is below the 20-day moving average (MA) of 66.71, below the 50-day MA of 67.30, and above the 200-day MA of 63.55, indicating a bullish trend. The MACD of 0.45 indicates Negative momentum. The RSI at 55.81 is Neutral, neither overbought nor oversold. The STOCH value of 59.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FAF.
First American Financial Risk Analysis
First American Financial disclosed 29 risk factors in its most recent earnings report. First American Financial reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
First American Financial Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $5.39B | 7.99 | 12.01% | 1.88% | 1.34% | 2.64% | |
80 Outperform | $6.38B | 9.91 | 12.74% | 2.02% | 1.98% | 3.55% | |
76 Outperform | $5.96B | 8.97 | 14.00% | 1.89% | -1.24% | 4.62% | |
73 Outperform | $6.99B | 10.60 | 12.56% | 3.58% | 27.63% | 328.74% | |
72 Outperform | $5.01B | 9.16 | 12.01% | 2.78% | 7.69% | 3.24% | |
69 Neutral | $12.69B | 16.91 | 9.85% | 3.69% | 13.76% | -30.60% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
FAF
First American Financial
68.59
8.10
13.39%
FNF
Fidelity National Financial
47.16
-5.90
-11.13%
MTG
MGIC Investment
28.20
0.62
2.26%
RDN
Radian Group
37.67
2.18
6.15%
ESNT
Essent Group
64.28
4.18
6.96%
ACT
Enact Holdings
45.71
8.85
24.01%
First American Financial Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and ComplianceShareholder Meetings
First American Shareholders Approve Governance Reforms and Declassification
Positive
May 15, 2026
At its May 12, 2026 annual meeting, First American Financial stockholders approved amendments to the company’s certificate of incorporation to eliminate supermajority voting thresholds on director removal, charter changes and bylaw amendment...
Executive/Board Changes
First American Executive Chairman Cancels Unvested Equity Awards
Positive
Apr 29, 2026
On April 29, 2026, First American Financial said its Board and Executive Chairman Dennis J. Gilmore mutually agreed to cancel all of his outstanding and unvested restricted stock units and performance-based restricted stock units that had been gra...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.