First American Financial (FAF) AI Stock Analysis

• Market Cap: $6.36B
• Dividend Yield: 3.47%
• Average Volume (3M): 754.81K
• Price to Earnings (P/E): 13.4
• Beta (1Y): 0.64
• Revenue Growth: 25.99%
• EPS Growth: 426.44%
• Country: US
• Employees: 19,038
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Specialty
• EPS (TTM): 1.84
• Shares Outstanding: 101,900,000
• 10 Day Avg. Volume: 908,996
• 30 Day Avg. Volume: 754,809
• PEG Ratio: -1.26
• Price to Book (P/B): 1.32
• Price to Sales (P/S): 1.06
• P/FCF Ratio: 9.55
• Enterprise Value/Market Cap: 1.32
• Enterprise Value/Revenue: 1.59
• Enterprise Value/Gross Profit: 2.21
• Enterprise Value/Ebitda: -10.77
• 1Y Price Target: $75.33
• Price Target Upside: 19.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 4.79
• Revenue Forecast (FY): $7.16B

• Rating: 60 Neutral
• Price Target: $64.00 ▲(1.51% Upside)

First American Financial's overall stock score reflects a mixed financial performance with challenges in revenue and profitability, but stable balance sheet and effective cash flow management. The positive earnings call, highlighting strong commercial revenue growth and strategic investments in technology, boosts the score. Valuation is reasonable, offering a fair return potential. Technical indicators are neutral, indicating no strong momentum.

First American Financial Business Overview & Revenue Model

Company Description

First American Financial Corporation (FAF) is a leading provider of title insurance, settlement services, and risk solutions for real estate transactions. The company operates primarily in the real estate and mortgage sectors, offering a wide range of products including title insurance, escrow services, and home warranty solutions. FAF serves various customers, including real estate agents, lenders, and homebuyers, and is known for its comprehensive suite of services that facilitate real estate transactions and protect property ownership rights.

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 shows mixed financial health. The income statement reveals challenges in revenue generation and profitability, with a declining revenue trend and negative EBIT. The balance sheet is stable with manageable leverage, but volatile return on equity poses risks. Cash flow management is generally effective, though free cash flow fluctuations indicate potential challenges.

Income Statement

First American Financial's income statement shows a declining revenue trend with a notable decrease in total revenue over the TTM period. The gross profit margin is healthy, but the net profit margin is affected by a negative EBIT, indicating operational challenges. The company experienced a negative revenue growth rate, reflecting potential difficulties in maintaining its market position.

Balance Sheet

The balance sheet is relatively stable with a reasonable debt-to-equity ratio, suggesting manageable leverage. The equity ratio is strong, indicating a solid asset base supported by stockholders' equity. However, the return on equity has been volatile, which might pose risks in delivering consistent shareholder returns.

Cash Flow

Cash flow analysis reveals a robust operating cash flow, although the free cash flow growth rate is slightly negative due to higher capital expenditures. The operating cash flow to net income ratio is healthy, reflecting efficient cash management. However, fluctuations in free cash flow indicate potential challenges in sustaining cash reserves.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.29B	6.12B	6.00B	7.61B	9.22B	7.09B
Gross Profit	3.81B	3.76B	3.71B	7.61B	9.22B	5.97B
EBITDA	-781.00M	522.40M	595.40M	585.70M	1.87B	1.13B
Net Income	482.30M	131.10M	216.80M	263.00M	1.24B	696.00M
Balance Sheet
Total Assets	17.61B	14.91B	16.80B	19.64B	16.47B	12.81B
Cash, Cash Equivalents and Short-Term Investments	2.91B	1.72B	3.61B	1.29B	1.29B	1.28B
Total Debt	0.00	2.42B	2.19B	1.92B	2.46B	1.01B
Total Liabilities	12.31B	9.98B	11.94B	14.96B	10.68B	7.89B
Stockholders Equity	5.30B	4.91B	4.85B	4.67B	5.77B	4.91B
Cash Flow
Free Cash Flow	704.20M	679.20M	90.90M	520.00M	1.06B	970.58M
Operating Cash Flow	906.10M	897.50M	354.30M	780.00M	1.22B	1.08B
Investing Cash Flow	-1.34B	-458.70M	599.50M	-395.00M	-3.39B	-1.42B
Financing Cash Flow	403.50M	-2.31B	1.42B	-376.00M	2.13B	113.92M

First American Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 63.05
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 63.05 is above the 20-day moving average (MA) of 61.78, below the 50-day MA of 63.35, and above the 200-day MA of 61.19, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 53.74 is Neutral, neither overbought nor oversold. The STOCH value of 45.92 is Neutral, 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
ACT	80 Outperform	$5.34B	8.50	12.75%	2.14%	2.40%	1.18%
MTG	78 Outperform	$6.27B	9.01	14.40%	1.98%	2.20%	9.90%
RDN	77 Outperform	$4.72B	8.71	12.56%	2.86%	-3.68%	3.65%
ESNT	73 Outperform	$6.10B	9.02	12.35%	1.99%	2.78%	-0.50%
FNF	69 Neutral	$15.50B	13.28	14.22%	3.51%	3.92%	55.78%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
FAF	60 Neutral	$6.36B	13.40	9.28%	3.47%	25.99%	426.44%

First American Financial Corporate Events

First American Financial’s Strong Q3 2025 Performance

First American Financial Corporation is a leading provider of title, settlement, and risk solutions for real estate transactions, known for its digital transformation initiatives in the industry. In the third quarter of 2025, the company reported a significant increase in total revenue, reaching $2.0 billion, up 41% from the previous year, and a net income of $190 million, marking a substantial recovery from a net loss in the same period last year. Key financial highlights include a 12.9% pretax margin in the Title Insurance and Services segment and a 14.1% pretax margin in the Home Warranty segment, alongside a 29% increase in commercial revenues. The company also repurchased shares worth $34 million and raised its dividend by 2%. Looking ahead, First American Financial is optimistic about its growth prospects, emphasizing its strategic investments in data, technology, and AI to enhance productivity and capitalize on future market opportunities.

First American’s Earnings Call: Growth Amid Challenges

First American’s recent earnings call painted a picture of robust growth and strategic optimism, despite some ongoing challenges. The company reported significant increases in commercial revenue and investment income, largely driven by strong performances in the industrial and multifamily sectors. While the residential market faces hurdles due to affordability issues and high mortgage rates, First American remains confident about future prospects, particularly with advancements in AI and technology poised to boost productivity. However, higher operating costs and potential rate cuts in Texas pose challenges that the company must navigate.