First American Financial (FAF) AI Stock Analysis

• Market Cap: $5.95B
• Dividend Yield: 3.74%
• Average Volume (3M): 1.03M
• Price to Earnings (P/E): 38.1
• Beta (1Y): 0.74
• Revenue Growth: 0.96%
• EPS Growth: -27.04%
• Country: US
• Employees: 19,038
• Sector: Financial
• Sector Strength: 76
• Industry: Insurance - Specialty
• EPS (TTM): 0.71
• Shares Outstanding: 102,900,000
• 10 Day Avg. Volume: 1,144,447
• 30 Day Avg. Volume: 1,028,019
• PEG Ratio: -0.27
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 10.77
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 0.31
• Enterprise Value/Gross Profit: 1.11
• Enterprise Value/Ebitda: 6.95
• 1Y Price Target: $74.00
• Price Target Upside: 28.07% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 66 Neutral
• Price Target: $66.00 ▲(14.23%Upside)

First American Financial's overall score reflects stable financial performance and positive earnings call highlights, particularly in commercial and refinance revenue growth. However, technical indicators show potential short-term weakness, and the high P/E ratio indicates possible overvaluation. While the dividend yield adds value, challenges in residential origination and tech costs are key risks to watch.

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 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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.58B	6.12B	938.50M	7.61B	9.22B	7.09B
	Gross Profit
6.00B	6.12B	-128.50M	5.26B	9.22B	5.97B
	EBIT
383.50M	165.40M	401.50M	326.00M	419.00M	-94.16M
	EBITDA
282.20M	522.40M	595.40M	585.70M	0.00	1.13B
	Net Income Common Stockholders
158.60M	131.10M	216.80M	263.00M	1.24B	696.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.05B	1.72B	3.61B	1.22B	1.23B	1.28B
	Total Assets
15.50B	14.91B	16.80B	19.64B	16.47B	12.81B
	Total Debt
2.51B	2.42B	1.39B	2.28B	2.46B	1.01B
	Net Debt
403.80M	616.80M	-2.21B	1.06B	1.23B	-264.71M
	Total Liabilities
10.46B	9.98B	11.94B	14.96B	10.68B	7.89B
	Stockholders Equity
5.02B	4.91B	4.85B	4.67B	5.77B	4.91B
Cash Flow		Free Cash Flow
567.10M	679.20M	90.90M	520.00M	1.06B	970.58M
	Operating Cash Flow
775.40M	897.50M	354.30M	780.00M	1.22B	1.08B
	Investing Cash Flow
-465.90M	-458.70M	599.50M	-395.00M	-3.39B	-1.42B
	Financing Cash Flow
239.20M	-2.31B	1.42B	-376.00M	2.13B	113.92M

First American Financial Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 57.78
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Neutral. The current price of 57.78 is above the 20-day moving average (MA) of 56.21, below the 50-day MA of 58.31, and below the 200-day MA of 61.87, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 50.95 is Neutral, neither overbought nor oversold. The STOCH value of 60.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	$5.38B	8.07	14.09%	2.34%	4.33%	10.21%
MTG	79 Outperform	$6.40B	8.96	15.12%	1.93%	4.64%	15.36%
ESNT	79 Outperform	$5.99B	8.65	13.29%	2.10%	9.87%	3.41%
RDN	78 Outperform	$4.66B	8.83	13.22%	2.94%	2.95%	4.08%
FAF	66 Neutral	$5.95B	38.13	3.23%	3.74%	0.96%	-27.04%
Sector *	64 Neutral	$12.73B	9.92	7.90%	78.88%	12.06%	-7.95%
FNF	64 Neutral	$14.86B	13.37	14.72%	3.69%	4.40%	33.32%

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.