First American Financial (FAF) AI Stock Analysis

• Market Cap: $6.21B
• Dividend Yield: 3.6%
• Average Volume (3M): 1.42M
• Price to Earnings (P/E): 33.7
• 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: 1,208,560
• 30 Day Avg. Volume: 1,423,727
• PEG Ratio: 1.69
• Price to Book (P/B): 1.23
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.36
• Enterprise Value/Market Cap: 0.68
• Enterprise Value/Revenue: 0.20
• Enterprise Value/Gross Profit: 1.17
• Enterprise Value/Ebitda: 1.97
• 1Y Price Target: $74.00
• Price Target Upside: 22.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 60 Neutral
• Price Target: $64.00 ▲(6.22%Upside)

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 (FAF) is a leading provider of title insurance and settlement services to the real estate and mortgage industries. The company operates primarily in the United States and offers a wide range of products and services including title insurance, closing and escrow services, and other real estate-related solutions. Its customer base includes real estate professionals, homebuyers, and sellers, as well as lenders and other businesses involved in real estate transactions.

How the Company Makes Money

First American Financial makes money primarily through the underwriting of title insurance policies, which protect property buyers and mortgage lenders against potential losses from title defects or liens. The company charges premiums for these insurance policies, which constitute a significant portion of its revenue. Additionally, FAF generates income from various services related to real estate transactions, such as closing and escrow services, document recording, and property data and analytics. The company also benefits from partnerships with real estate professionals, lenders, and other entities, which help expand its reach and customer base. Interest income from escrow deposits and investment income further contribute to its earnings.

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: 60.25
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 60.25 is above the 20-day moving average (MA) of 58.79, above the 50-day MA of 58.10, and below the 200-day MA of 61.32, indicating a neutral trend. The MACD of 0.30 indicates Negative momentum. The RSI at 56.37 is Neutral, neither overbought nor oversold. The STOCH value of 87.12 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
ACT	84 Outperform	$5.29B	7.93	13.47%	2.20%	4.33%	10.21%
RDN	78 Outperform	$4.56B	8.63	13.07%	2.98%	2.95%	4.08%
MTG	74 Outperform	$6.10B	8.54	15.12%	2.05%	4.64%	15.36%
ESNT	73 Outperform	$5.73B	8.28	13.29%	2.11%	9.87%	3.41%
FNF	69 Neutral	$15.68B	14.10	14.72%	3.50%	4.40%	33.32%
Sector *	67 Neutral	$17.06B	11.24	9.31%	3.84%	11.08%	-3.39%
FAF	60 Neutral	$6.21B	33.71	3.80%	3.60%	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.