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First American Financial
(NYSE:FAF)
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Rating:71Outperform
Price Target:
$76.00
â–²(1.16% Upside)
Action:Reiterated
Date:07/24/26
FAF scores well primarily on improving financial performance (strong margins/returns, solid balance sheet leverage, and strong free cash flow) and attractive valuation (low P/E and ~3.2% dividend yield). The overall score is moderated by mixed near-term technicals and earnings-call risks tied to housing-driven volume sensitivity (residential weakness) plus cost/interest-expense pressure and leverage running above management’s target.
Positive Factors
Strong cash generation
High operating and free cash flow with FCF at ~83% of net income shows sustainable cash conversion. This durability funds dividends, buybacks, disciplined M&A and tech investments, reducing reliance on external financing and supporting capital allocation through cycles.
Negative Factors
Revenue volatility
A large TTM revenue drop highlights material sensitivity to transaction volumes. For a title insurer reliant on closings, cyclical housing activity can swing top line and stress margin stability; consistent recovery in bookings is required to sustain current profitability.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
High operating and free cash flow with FCF at ~83% of net income shows sustainable cash conversion. This durability funds dividends, buybacks, disciplined M&A and tech investments, reducing reliance on external financing and supporting capital allocation through cycles.
Read all positive factors
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 (FAF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.66B
Dividend Yield2.93%
Average Volume (3M)969.26K
Price to Earnings (P/E)10.4
Beta (1Y)0.67
Revenue Growth22.55%
EPS Growth298.19%
CountryUS
Employees19,102
SectorFinancial
Sector Strength70
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)7.24
Shares Outstanding102,100,000
10 Day Avg. Volume858,285
30 Day Avg. Volume969,258
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$84.75Price Target Upside12.80% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)6.91
Revenue Forecast (FY)$8.15B
First American Financial Business Overview & Revenue Model
Company Description
First American Financial Corporation (FAF) delivers financial services primarily through its diverse subsidiaries. The company's operations are divided into two main divisions: Title Insurance and Services, and Specialty Insurance. The Title Insur...
How the Company Makes Money
FAF generates revenue mainly from its title insurance and real estate transaction services. A key stream is premiums and fees associated with issuing title insurance policies for property buyers and mortgage lenders, typically earned when a real e...
First American Financial Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 21, 2026
Earnings Call Sentiment Positive
The call emphasized multiple strong operational and financial positives — notably record commercial performance, robust deposit and trust growth, meaningful free cash flow expansion, tangible AI-driven productivity gains, and a healthy acquisition/payout posture. Offsetting items include continued weakness in the residential purchase and refinance markets, rising interest expense tied to deposit growth, and increased operating costs in select areas. On balance, the positive growth drivers and strategic progress (especially in commercial and AI automation) materially outweigh the headwinds from residential volume softness and near-term cost pressure.Positive Updates
Adjusted / GAAP Earnings
CEO reported adjusted EPS of $2.80 (+36% YoY). CFO reported GAAP EPS $2.12 and adjusted EPS $2.08 (note: both CEO and CFO referenced adjusted earnings during the call).
Negative Updates
Residential Purchase Market Weakness
Purchase revenue only up 2% YoY (6% increase in ARPO offset by a 3% decline in closed orders). Management remains cautious: open purchase orders were flat through the first three weeks of July and existing home sales described as sluggish; affordability continues to weigh on volumes.
Read all updates
Q2-2026 Updates
Positive
Negative
Adjusted / GAAP Earnings
CEO reported adjusted EPS of $2.80 (+36% YoY). CFO reported GAAP EPS $2.12 and adjusted EPS $2.08 (note: both CEO and CFO referenced adjusted earnings during the call).
Read all positive updates
Company Guidance
Management's guidance was upbeat for H2, driven by a strong commercial pipeline and AI/platform rollouts: they expect commercial to deliver a record year (already closed 3 deals >$1M in July; commercial opened orders +9% in the first 3 weeks of July), while open purchase orders are flat through early July; cash generation should strengthen in H2 after YTD free cash flow of $285M (+32% YoY) with capex down 18% YoY; First American Trust deposits averaged $7.9B (+30% YoY) with 36% from non‑title sources (ServiceMAC $1.7B, +76% YoY; ServiceMAC loan portfolio +54%), 31 Exchange deposits averaged $827M in Q2 (~1/3 of 31 balances), and 10 agents now bank with the trust (+37% YoY); tech targets include scaling Endpoint across the local branch network by end of 2027 (automation 30%→34% Q1→Q2, 39% in July), deploying Sequoia across CA and FL by year‑end (automation 35%→40% Q1→Q2; instant decisioning ≈16% of purchase orders in launched counties; long‑run targets ~70% purchase and ~80% refinance automation where title plans exist), expanding self‑service use cases 1→7 by year‑end, keeping technology spend roughly flat since 2022, pursuing disciplined M&A, continuing dividend increases and opportunistic buybacks (Q2 repurchases 330k shares for $20M at $61.99), and maintaining a comfortable balance sheet (debt‑to‑capital 31.4%, ex‑secured 21.5%).First American Financial Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
72
Positive
Cash Flow
75
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.18B | 7.45B | 6.12B | 6.00B | 7.59B | 9.21B |
| Gross Profit | 3.21B | 7.12B | 3.76B | 3.71B | 4.28B | 5.64B |
| EBITDA | 837.10M | 1.20B | 522.40M | 595.40M | 586.20M | 1.87B |
| Net Income | 745.10M | 621.80M | 131.10M | 216.80M | 263.00M | 1.24B |
Balance Sheet | ||||||
| Total Assets | 18.94B | 16.23B | 14.91B | 16.80B | 14.96B | 16.45B |
| Cash, Cash Equivalents and Short-Term Investments | 2.62B | 1.39B | 1.80B | 3.66B | 1.29B | 1.29B |
| Total Debt | 1.75B | 1.91B | 2.42B | 2.19B | 2.28B | 2.46B |
| Total Liabilities | 13.32B | 10.73B | 9.98B | 11.94B | 10.27B | 10.67B |
| Stockholders Equity | 5.60B | 5.50B | 4.91B | 4.85B | 4.66B | 5.77B |
Cash Flow | ||||||
| Free Cash Flow | 832.30M | 762.50M | 679.20M | 90.90M | 520.00M | 1.06B |
| Operating Cash Flow | 1.00B | 950.80M | 897.50M | 354.30M | 780.00M | 1.22B |
| Investing Cash Flow | -2.16B | -1.46B | -458.70M | 599.50M | -395.00M | -3.39B |
| Financing Cash Flow | 1.75B | 164.40M | -2.31B | 1.42B | -376.00M | 2.13B |
First American Financial Technical Analysis
Positive
75.13
Price Trends
69.72
Positive
67.15
Positive
64.98
Positive
Market Momentum
1.79
Positive
57.17
Neutral
43.89
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 75.13 is above the 20-day moving average (MA) of 73.37, above the 50-day MA of 69.72, and above the 200-day MA of 64.98, indicating a bullish trend. The MACD of 1.79 indicates Positive momentum. The RSI at 57.17 is Neutral, neither overbought nor oversold. The STOCH value of 43.89 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
85 Outperform | $6.08B | 9.30 | 12.01% | 2.01% | 1.34% | 2.64% | |
84 Outperform | $6.61B | 10.20 | 12.76% | 1.86% | 1.98% | 3.55% | |
81 Outperform | $6.16B | 9.36 | 13.90% | 2.02% | -1.88% | 4.83% | |
77 Outperform | $5.18B | 9.44 | 12.01% | 2.64% | 7.69% | 3.24% | |
75 Outperform | $13.89B | 18.29 | 9.85% | 3.96% | 13.76% | -30.60% | |
71 Outperform | $7.66B | 10.36 | 13.62% | 2.93% | 22.55% | 298.19% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
FAF
First American Financial
75.15
14.66
24.23%
FNF
Fidelity National Financial
52.54
-1.13
-2.10%
MTG
MGIC Investment
30.26
4.38
16.94%
RDN
Radian Group
36.26
3.95
12.21%
ESNT
Essent Group
65.51
9.73
17.45%
ACT
Enact Holdings
48.67
13.53
38.52%
First American Financial Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and ComplianceShareholder Meetings
First American Shareholders Approve Governance Reforms and Declassification
Positive
May 15, 2026
At its May 12, 2026 annual meeting, First American Financial stockholders approved amendments to the company’s certificate of incorporation to eliminate supermajority voting thresholds on director removal, charter changes and bylaw amendment...
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.