First American Financial Corporation (FAF)
NYSE:FAF
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First American Financial
(NYSE:FAF)
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Rating:66Neutral
Price Target:
$63.00
▼(-0.62% Downside)
Action:DowngradedDate:02/20/26
The score is driven primarily by mixed financial performance: strong, improving cash generation and a generally stable balance sheet are offset by volatile profitability and flagged 2025 income statement consistency concerns. Technicals add support with a bullish moving-average setup and healthy (not overextended) momentum, while valuation is attractive (low P/E and solid yield). Earnings-call tone and 2026 growth outlook are constructive but tempered by residential/purchase softness, cost pressure, and execution/timing risk around technology-led margin gains.
Positive Factors
Cash generation / Free cash flow
Consistent positive free cash flow and a clear rebound in 2024–2025 provide durable financial flexibility. Reliable cash generation supports ongoing tech investment, dividends and buybacks, and gives the company leeway to absorb real estate cyclical downturns without sacrificing capital allocation priorities.
Negative Factors
Volatile profitability & reporting consistency
Material swings in revenue and margins, and noted 2025 anomalies, reduce earnings predictability and hinder reliable forecasting. Persistent volatility complicates long-term planning, obscures true operating trends, and raises the risk of one-time items masking core performance for investors and management.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation / Free cash flow
Consistent positive free cash flow and a clear rebound in 2024–2025 provide durable financial flexibility. Reliable cash generation supports ongoing tech investment, dividends and buybacks, and gives the company leeway to absorb real estate cyclical downturns without sacrificing capital allocation priorities.
Read all positive factors
First American Financial (FAF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.46B
Dividend Yield3.58%
Average Volume (3M)1.04M
Price to Earnings (P/E)10.2
Beta (1Y)0.59
Revenue Growth25.99%
EPS Growth426.44%
CountryUS
Employees19,038
SectorFinancial
Sector Strength70
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)2.05
Shares Outstanding101,900,000
10 Day Avg. Volume858,662
30 Day Avg. Volume1,039,590
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 Cap1.08
Enterprise Value/Revenue0.94
Enterprise Value/Gross Profit1.30
Enterprise Value/Ebitda5.82
Forecast
1Y Price Target
$78.33Price Target Upside23.57% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)6.31
Revenue Forecast (FY)$7.98B
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 polici...
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 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 Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 22, 2026
Earnings Call Sentiment Positive
The call presented several strong positive developments: robust adjusted EPS (up 47%), broad Title revenue growth (up 14%), a powerful commercial surge (commercial revenue +35% with ARPU +22%), solid gains in agency, information and investment income, meaningful AI/product milestones (Endpoint and Sequoia) and market-share gains (+90 bps). These positives offset notable challenges in the residential/purchase market (purchase revenue down 4%, closed orders down 7%), rising operating expenses, and some near-term uncertainty around timing and scale of technology-driven margin improvements. On balance, the company displayed clear operational momentum, diversified revenue tailwinds (commercial strength, 1031 deposit growth, adjacent businesses), and a disciplined capital-return posture, while acknowledging ongoing residential headwinds and measured execution risk on tech rollouts.Positive Updates
Strong EPS and GAAP Results
Adjusted EPS of $1.99, up 47% year-over-year; GAAP EPS of $2.05. Results include one-time benefits of $28.0M ($0.20 per diluted share).
Negative Updates
Sluggish Residential Market and Purchase Weakness
Existing home sales at ~4.0M vs. a normalized ~5.5M. Purchase revenue declined 4% quarter-over-quarter with closed purchase orders down 7% (open purchase orders down 7% in Q4), implying continued near-term weakness in purchase revenue.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong EPS and GAAP Results
Adjusted EPS of $1.99, up 47% year-over-year; GAAP EPS of $2.05. Results include one-time benefits of $28.0M ($0.20 per diluted share).
Read all positive updates
Company Guidance
Management guided that 2026 should see growth across its three major revenue drivers—commercial, purchase and refinance—with commercial expected to deliver a record revenue year (exceeding the 2022 peak) and purchase revenue forecast at +7–8%; they noted open purchase orders were down 7% in Q4 (implying Q1 weakness), January open purchase orders were essentially flat, January refinance open orders were +72%, and January closed orders/day were: purchase -7%, commercial +13%, refinance +48%. Key operating and financial metrics cited: Title adjusted revenue $1.9B (+14%), commercial revenue $339M (+35%) with closed orders +10% and ARPU +22% to $18,600, refinance revenue +47% (refi = 7% of direct revenue), agency revenue $790M (+13%), information & other $274M (+15%), Title pre‑tax margin 14.9% (14.0% adjusted), success ratio 47%, provision for policy losses 3% of premiums/fees with a 3.75% policy‑year ultimate loss rate, Q4 investment income $157M (+1%) and net investment gains $28M, 1031 deposits up from $94M YE to >$300M (target ≈$1,000M by year‑end), plan to roll out Endpoint nationally over two years (153 orders opened/47 closed today) and expand Sequoia (40% automation in current markets) toward broader national rollout in 2027, capital priorities of tech investment, M&A, dividends (2025 payout 36%, target ~40%) and opportunistic buybacks (2025 returned ~56% of net income).First American Financial Financial Statement Overview
Summary
Income Statement
41
Neutral
Balance Sheet
64
Positive
Cash Flow
71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 7.45B | 6.12B | 6.00B | 7.59B | 9.21B |
| Gross Profit | 7.12B | 3.76B | 3.71B | 4.28B | 5.64B |
| EBITDA | 1.20B | 522.40M | 595.40M | 586.20M | 1.87B |
| Net Income | 621.80M | 131.10M | 216.80M | 263.00M | 1.24B |
Balance Sheet | |||||
| Total Assets | 16.23B | 14.91B | 16.80B | 19.64B | 16.47B |
| Cash, Cash Equivalents and Short-Term Investments | 1.39B | 1.80B | 3.66B | 1.29B | 1.29B |
| Total Debt | 1.91B | 2.42B | 2.19B | 1.92B | 2.46B |
| Total Liabilities | 10.73B | 9.98B | 11.94B | 14.96B | 10.68B |
| Stockholders Equity | 5.50B | 4.91B | 4.85B | 4.67B | 5.77B |
Cash Flow | |||||
| Free Cash Flow | 762.50M | 679.20M | 90.90M | 520.00M | 1.06B |
| Operating Cash Flow | 950.80M | 897.50M | 354.30M | 780.00M | 1.22B |
| Investing Cash Flow | -1.46B | -458.70M | 599.50M | -395.00M | -3.39B |
| Financing Cash Flow | 164.40M | -2.31B | 1.42B | -376.00M | 2.13B |
First American Financial Technical Analysis
Positive
63.39
Price Trends
64.07
Negative
63.17
Positive
62.18
Positive
Market Momentum
-1.10
Negative
54.79
Neutral
90.46
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 63.39 is above the 20-day moving average (MA) of 60.94, below the 50-day MA of 64.07, and above the 200-day MA of 62.18, indicating a neutral trend. The MACD of -1.10 indicates Negative momentum. The RSI at 54.79 is Neutral, neither overbought nor oversold. The STOCH value of 90.46 is Negative, 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 |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.98B | 8.72 | 12.83% | 2.02% | 2.40% | 1.18% | |
76 Outperform | $5.78B | 9.33 | 12.35% | 1.88% | 2.78% | -0.50% | |
70 Outperform | $4.71B | 8.52 | 12.59% | 2.78% | -3.68% | 3.65% | |
68 Neutral | $5.81B | 8.93 | 14.33% | 1.89% | 2.20% | 9.90% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $6.46B | 10.21 | 11.87% | 3.58% | 25.99% | 426.44% | |
54 Neutral | $12.63B | ― | 7.63% | 3.69% | 3.91% | 55.78% |
* Financial Sector Average
FAF
First American Financial
63.39
4.20
7.09%
FNF
Fidelity National Financial
47.60
-9.14
-16.11%
MTG
MGIC Investment
27.43
4.05
17.32%
RDN
Radian Group
34.57
3.22
10.28%
ESNT
Essent Group
61.15
6.88
12.68%
ACT
Enact Holdings
42.29
9.64
29.53%
First American Financial Corporate Events
Executive/Board Changes
First American Financial announces board retirement and change
Neutral
Jan 21, 2026
On Jan. 21, 2026, Martha Wyrsch retired from the Board of Directors of First American Financial, marking a change in the company’s board composition and governance structure.The most recent analyst rating on (FAF) stock is a Buy with a $65.0...
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.