First American Financial (FAF) AI Stock Analysis

• Market Cap: $6.60B
• Dividend Yield: 3.34%
• Average Volume (3M): 1.21M
• Price to Earnings (P/E): 35.8
• Beta (1Y): 0.75
• Revenue Growth: 14.28%
• EPS Growth: -2.87%
• Country: US
• Employees: 19,038
• Sector: Financial
• Sector Strength: 72
• Industry: Insurance - Specialty
• EPS (TTM): 1.41
• Shares Outstanding: 101,800,000
• 10 Day Avg. Volume: 573,526
• 30 Day Avg. Volume: 1,209,424
• 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: 1.24
• Enterprise Value/Revenue: 1.70
• Enterprise Value/Gross Profit: 5.20
• Enterprise Value/Ebitda: -7.21
• 1Y Price Target: $74.00
• Price Target Upside: 14.44% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 60 Neutral
• Price Target: $64.00 ▼(-1.02% Downside)

First American Financial's overall score reflects solid technical momentum and positive earnings call sentiment, despite financial performance challenges. Strategic growth in commercial revenue and investment income, alongside a share repurchase plan, balance out concerns over revenue decline and valuation pressures.

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: 64.66
• 50DMA: Positive
• 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 64.66 is above the 20-day moving average (MA) of 62.89, above the 50-day MA of 60.57, and above the 200-day MA of 61.34, indicating a bullish trend. The MACD of 1.50 indicates Negative momentum. The RSI at 62.99 is Neutral, neither overbought nor oversold. The STOCH value of 63.99 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	84 Outperform	$5.57B	8.57	13.47%	2.09%	3.15%	5.70%
ESNT	81 Outperform	$6.15B	9.11	12.94%	1.89%	4.79%	-0.76%
RDN	78 Outperform	$4.73B	8.78	13.07%	2.88%	0.24%	3.14%
MTG	75 Outperform	$6.33B	9.00	14.85%	1.96%	3.26%	12.70%
FNF	71 Outperform	$16.16B	15.07	14.20%	3.34%	7.25%	17.55%
Sector *	68 Neutral	$17.49B	11.70	10.34%	3.85%	9.75%	0.63%
FAF	60 Neutral	$6.60B	35.83	3.80%	3.34%	14.28%	-2.87%

First American Financial Corporate Events

First American Financial Approves Key Amendments and Elections

On May 13, 2025, First American Financial Corporation’s stockholders approved amendments to the company’s 2020 Incentive Compensation Plan and the Amended and Restated Certificate of Incorporation. The amendments to the compensation plan allow for the delivery of 8,425,000 shares, while the certificate amendment extends exculpation to certain officers under Delaware law. Additionally, the stockholders elected Class III directors, approved executive compensation, ratified the selection of PricewaterhouseCoopers LLP as the independent public accounting firm for 2025, and supported a non-binding proposal for simple majority voting requirements.

The most recent analyst rating on (FAF) stock is a Buy with a $73.00 price target. To see the full list of analyst forecasts on First American Financial stock, see the FAF Stock Forecast page.