First American Financial (FAF) AI Stock Analysis

• Market Cap: $6.25B
• Dividend Yield: 3.53%
• Average Volume (3M): 688.29K
• Price to Earnings (P/E): 13.7
• Beta (1Y): 0.70
• Revenue Growth: 14.28%
• EPS Growth: -2.87%
• Country: US
• Employees: 19,038
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Specialty
• EPS (TTM): 1.84
• Shares Outstanding: 101,800,000
• 10 Day Avg. Volume: 653,935
• 30 Day Avg. Volume: 688,288
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $75.33
• Price Target Upside: 18.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 54 Neutral
• Price Target: $63.00 ▼(-0.85% Downside)

First American Financial's overall score reflects a mixed financial performance with stable balance sheet but declining revenue. The earnings call provided positive insights, particularly in the commercial segment and investment income growth. However, valuation concerns and technical indicators suggest caution.

First American Financial Business Overview & Revenue Model

Company Description

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 Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, mortgage subservicing, and related products and services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in 49 states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, South Korea, and internationally. The Specialty Insurance segment provides property and casualty insurance comprising coverage to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism, and other types of property damage. It also offers residential service contracts that cover residential systems, such as heating and air conditioning systems, and appliances against failures that occur as the result of normal usage during the coverage period. First American Financial Corporation was founded in 1889 and is headquartered in Santa Ana, California.

How the Company Makes Money

First American Financial generates revenue primarily through its title insurance and settlement services. The company earns money by charging premiums for title insurance policies, which protect property buyers and lenders against potential defects in title. Additionally, FAF provides settlement services, earning fees for facilitating real estate closings. Other revenue streams include home warranty services and data analytics for the real estate industry. Significant partnerships with lenders and real estate professionals enhance its market reach, contributing to its earnings through increased volume of transactions and cross-selling opportunities.

First American Financial Financial Statement Overview

Summary

First American Financial demonstrates stable financial health with strong margins and cash flow generation. While revenue and net income have seen fluctuations, the company maintains a balanced debt profile and steady equity position. Continued focus on improving revenue growth and maintaining cash flow efficiency will bolster long-term financial stability.

Income Statement

Despite a declining revenue trend in recent periods, the company maintains a positive EBIT margin of 8.36% TTM. The gross profit margin is robust at 130.83% in the TTM period, though impacted by revenue decline. Net profit margin stands at 3.46% TTM, indicating moderate profitability with potential for improvement.

Balance Sheet

The debt-to-equity ratio is 0.50 TTM, reflecting a balanced use of leverage in financing. Return on Equity (ROE) is 3.16% TTM, showing modest returns on shareholder investments. The equity ratio is 32.39%, indicating a stable capital structure, although there is room for strengthening equity positions.

Cash Flow

Operating cash flow remains strong with a ratio of 4.89 to net income, indicating efficient cash generation from operations. The free cash flow to net income ratio is 3.57, highlighting strong cash flow capabilities. However, free cash flow growth rate shows volatility, pointing to potential cash management challenges.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.12B	6.00B	7.61B	9.22B	7.09B
Gross Profit	3.76B	3.71B	7.61B	9.22B	5.97B
EBITDA	522.40M	595.40M	585.70M	1.87B	1.13B
Net Income	131.10M	216.80M	263.00M	1.24B	696.00M
Balance Sheet
Total Assets	14.91B	16.80B	19.64B	16.47B	12.81B
Cash, Cash Equivalents and Short-Term Investments	1.72B	3.61B	1.29B	1.29B	1.28B
Total Debt	2.42B	2.19B	1.92B	2.46B	1.01B
Total Liabilities	9.98B	11.94B	14.96B	10.68B	7.89B
Stockholders Equity	4.91B	4.85B	4.67B	5.77B	4.91B
Cash Flow
Free Cash Flow	679.20M	90.90M	520.00M	1.06B	970.58M
Operating Cash Flow	897.50M	354.30M	780.00M	1.22B	1.08B
Investing Cash Flow	-458.70M	599.50M	-395.00M	-3.39B	-1.42B
Financing Cash Flow	-2.31B	1.42B	-376.00M	2.13B	113.92M

First American Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 63.54
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 63.54 is above the 20-day moving average (MA) of 61.63, below the 50-day MA of 63.94, and above the 200-day MA of 60.99, indicating a neutral trend. The MACD of -0.77 indicates Negative momentum. The RSI at 56.90 is Neutral, neither overbought nor oversold. The STOCH value of 80.05 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FAF.

First American Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RDN	78 Outperform	$4.67B	8.63	13.07%	2.93%	0.24%	3.14%
MTG	76 Outperform	$6.31B	8.99	14.85%	1.97%	3.26%	12.70%
ESNT	74 Outperform	$6.00B	8.90	12.94%	1.99%	4.79%	-0.76%
ACT	73 Outperform	$5.27B	8.12	13.47%	2.17%	3.15%	5.70%
FNF	73 Outperform	$15.34B	14.39	14.20%	3.54%	7.25%	17.55%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
FAF	54 Neutral	$6.25B	13.65	―	3.53%	14.28%	-2.87%

First American Financial Corporate Events

First American Financial Reports Strong Q2 2025 Results

First American Financial Corporation, a leading provider of title, settlement, and risk solutions for real estate transactions, has reported its financial results for the second quarter of 2025, showcasing its continued digital transformation in the industry. The company announced a new $300 million share repurchase authorization, highlighting its commitment to returning value to shareholders.

First American’s Earnings Call Reveals Growth Amid Challenges

The recent earnings call for First American Financial Corporation painted a generally positive picture, with significant growth in several key areas. The company reported substantial increases in commercial revenue and investment income, alongside strong performance in the Home Warranty segment. Despite facing challenges in the residential market, the overall sentiment was optimistic, buoyed by strategic initiatives such as share repurchase authorization and future technology rollouts.