First American Financial (FAF) AI Stock Analysis

• Market Cap: $6.29B
• Dividend Yield: 3.58%
• Average Volume (3M): 511.50K
• Price to Earnings (P/E): 13.1
• Beta (1Y): 0.60
• Revenue Growth: 25.99%
• EPS Growth: 426.44%
• Country: US
• Employees: 19,038
• Sector: Real Estate
• Sector Strength: 53
• Industry: Insurance - Specialty
• EPS (TTM): 1.84
• Shares Outstanding: 101,900,000
• 10 Day Avg. Volume: 675,435
• 30 Day Avg. Volume: 511,504
• 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: 1.34
• Enterprise Value/Revenue: 1.19
• Enterprise Value/Gross Profit: 1.89
• Enterprise Value/Ebitda: 8.35
• 1Y Price Target: $74.50
• Price Target Upside: 22.27% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 5.38
• Revenue Forecast (FY): $7.21B

• Rating: 74 Outperform
• Price Target: $69.00 ▲(13.24% Upside)

First American Financial's strong financial performance, particularly in revenue growth and cash flow generation, is a key strength. The earnings call provided a positive outlook with significant growth in commercial revenue and strategic investments in AI and technology. While technical indicators show mixed signals, the stock's reasonable valuation and attractive dividend yield enhance its appeal. The appointment of an experienced board member further supports the company's strategic direction.

Positive Factors

Revenue Growth

Sustained revenue growth, especially in the commercial segment, indicates robust demand and effective business strategies, supporting long-term expansion.

AI and Technology Investments

Strategic focus on AI and technology positions the company for future productivity improvements and competitive advantage in the market.

Board Appointment

The appointment of an experienced board member supports strategic direction and enhances leadership, crucial for navigating industry challenges.

Negative Factors

Operational Efficiency

Negative margins indicate potential inefficiencies, which could hinder profitability and require strategic adjustments to improve operational performance.

Residential Market Challenges

Challenges in the residential market due to affordability issues may limit growth opportunities and affect revenue stability in this segment.

Higher Operating Costs

Rising operating costs can pressure margins and profitability, necessitating cost management strategies to maintain financial health.

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 in the United States. With a strong presence in the title insurance industry, FAF operates through various segments, including Title Insurance and Services, and Data and Analytics Solutions. The company offers a comprehensive suite of products ranging from title insurance policies to escrow and closing services, as well as innovative data and analytics solutions aimed at streamlining the real estate transaction process.

How the Company Makes Money

First American Financial generates revenue primarily through title insurance premiums, which are collected when policies are issued for real estate transactions. The company also earns money from settlement services, which include closing services and escrow fees. Additionally, FAF has a significant income stream from its Data and Analytics segment, providing real estate data and technology solutions to businesses and government agencies. The company's partnerships with various real estate professionals, lenders, and developers further enhance its revenue opportunities, as these relationships drive a steady flow of transactions requiring title insurance and related services.

First American Financial Financial Statement Overview

Summary

First American Financial demonstrates strong revenue growth and cash flow generation, which are positive indicators of financial health. However, the negative EBIT and EBITDA margins in the TTM raise concerns about operational efficiency. The balance sheet is stable with moderate leverage, but profitability could be enhanced. Overall, the company is in a solid financial position with opportunities for improvement in profitability and operational efficiency.

Income Statement

First American Financial shows a strong revenue growth rate of 8.8% in the TTM, indicating a positive trajectory. The gross profit margin is robust at 71.98%, reflecting efficient cost management. However, the net profit margin is relatively low at 9.11%, suggesting room for improvement in profitability. The negative EBIT and EBITDA margins in the TTM are concerning, indicating potential operational inefficiencies.

Balance Sheet

The company maintains a healthy debt-to-equity ratio of 0.54, indicating moderate leverage. The return on equity is 9.48%, showing a reasonable return on shareholders' investments. The equity ratio stands at 30.09%, reflecting a stable capital structure. Overall, the balance sheet is stable, but there is potential risk if leverage increases.

Cash Flow

The cash flow statement reveals a positive free cash flow growth rate of 5.66% in the TTM, indicating strong cash generation. The operating cash flow to net income ratio is 2.54, suggesting efficient cash conversion. The free cash flow to net income ratio is 0.78, highlighting solid cash flow relative to earnings. Overall, the cash flow position is strong, supporting financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.08B	6.12B	6.00B	7.59B	9.21B	7.08B
Gross Profit	4.46B	3.76B	3.71B	4.28B	5.64B	4.32B
EBITDA	1.01B	522.40M	595.40M	586.20M	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	12.80B
Cash, Cash Equivalents and Short-Term Investments	2.99B	1.80B	3.66B	1.29B	1.29B	1.32B
Total Debt	2.85B	2.42B	2.19B	1.92B	2.46B	1.82B
Total Liabilities	12.28B	9.98B	11.94B	14.96B	10.68B	7.87B
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: Negative
• Last Price: 60.93
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FAF, the sentiment is Negative. The current price of 60.93 is below the 20-day moving average (MA) of 63.82, below the 50-day MA of 62.62, and below the 200-day MA of 60.96, indicating a bearish trend. The MACD of -0.18 indicates Positive momentum. The RSI at 37.37 is Neutral, neither overbought nor oversold. The STOCH value of 14.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FAF.

First American Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACT	82 Outperform	$5.83B	9.29	12.75%	2.02%	2.40%	1.18%
MTG	78 Outperform	$6.64B	9.54	14.40%	1.89%	2.20%	9.90%
FNF	74 Outperform	$14.94B	12.73	14.22%	3.69%	3.91%	55.78%
FAF	74 Outperform	$6.29B	13.09	9.28%	3.58%	25.99%	426.44%
ESNT	73 Outperform	$6.37B	9.58	12.35%	1.88%	2.78%	-0.50%
RDN	66 Neutral	$4.95B	9.17	12.56%	2.78%	-3.68%	3.65%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%

First American Financial Corporate Events

First American Financial Appoints Jeffrey Dailey to Board

On November 4, 2025, First American Financial Corporation announced the appointment of Jeffrey J. Dailey to its Board of Directors. Dailey brings over four decades of experience in the insurance industry, having previously led Farmers Group, Inc. as CEO, where he was instrumental in transforming the company into a customer-focused organization. His extensive expertise in leadership and technology-driven innovation is expected to bolster First American’s ongoing digital transformation efforts in the title and settlement industry.