FIRST AMERICAN FINANCIAL (FAF) Stock Fundamental Analysis
NYSE:FAF - New York Stock Exchange, Inc. - US31847R1023 - Common Stock - Currency: USD
Taking everything into account, FAF scores 4 out of 10 in our fundamental rating. FAF was compared to 143 industry peers in the Insurance industry. FAF may be in some trouble as it scores bad on both profitability and health. FAF has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year FAF was profitable.
In the past year FAF had a positive cash flow from operations.
FAF had positive earnings in each of the past 5 years.
Each year in the past 5 years FAF had a positive operating cash flow.
1.2 Ratios
FAF's Return On Assets of 0.88% is on the low side compared to the rest of the industry. FAF is outperformed by 61.54% of its industry peers.
Looking at the Return On Equity, with a value of 2.67%, FAF is doing worse than 79.72% of the companies in the same industry.
FAF has a Return On Invested Capital of 2.04%. This is comparable to the rest of the industry: FAF outperforms 49.65% of its industry peers.
FAF had an Average Return On Invested Capital over the past 3 years of 2.91%. This is in line with the industry average of 4.35%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.88% | ||
| ROE | 2.67% | ||
| ROIC | 2.04% |
ROA(3y)1.31%
ROA(5y)3.38%
ROE(3y)4.26%
ROE(5y)9.7%
ROIC(3y)2.91%
ROIC(5y)4.71%
1.3 Margins
With a Profit Margin value of 2.14%, FAF is not doing good in the industry: 76.92% of the companies in the same industry are doing better.
In the last couple of years the Profit Margin of FAF has declined.
Looking at the Operating Margin, with a value of 5.76%, FAF is doing worse than 72.73% of the companies in the same industry.
In the last couple of years the Operating Margin of FAF has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 5.76% | ||
| PM (TTM) | 2.14% | ||
| GM | N/A |
OM growth 3Y-31.37%
OM growth 5Y-18.17%
PM growth 3Y-46.08%
PM growth 5Y-28.45%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), FAF is destroying value.
FAF has about the same amout of shares outstanding than it did 1 year ago.
FAF has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, FAF has a worse debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of FAF is 3.22, which is a good value as it means it would take FAF, 3.22 years of fcf income to pay off all of its debts.
FAF has a Debt to FCF ratio (3.22) which is in line with its industry peers.
A Debt/Equity ratio of 0.45 indicates that FAF is not too dependend on debt financing.
FAF's Debt to Equity ratio of 0.45 is on the low side compared to the rest of the industry. FAF is outperformed by 61.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 3.22 | ||
| Altman-Z | N/A |
ROIC/WACC0.25
WACC8.2%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
FAF shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 29.38%, which is quite impressive.
Measured over the past years, FAF shows a decrease in Earnings Per Share. The EPS has been decreasing by -5.20% on average per year.
FAF shows a small growth in Revenue. In the last year, the Revenue has grown by 2.78%.
Measured over the past years, FAF shows a decrease in Revenue. The Revenue has been decreasing by -0.24% on average per year.
EPS 1Y (TTM)29.38%
EPS 3Y-18.68%
EPS 5Y-5.2%
EPS Q2Q%86.67%
Revenue 1Y (TTM)2.78%
Revenue growth 3Y-12.33%
Revenue growth 5Y-0.24%
Sales Q2Q%11.07%
3.2 Future
The Earnings Per Share is expected to grow by 15.48% on average over the next years. This is quite good.
Based on estimates for the next years, FAF will show a quite strong growth in Revenue. The Revenue will grow by 9.87% on average per year.
EPS Next Y15.92%
EPS Next 2Y18.87%
EPS Next 3Y15.48%
EPS Next 5YN/A
Revenue Next Year17.04%
Revenue Next 2Y13.56%
Revenue Next 3Y9.87%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 12.46, the valuation of FAF can be described as correct.
FAF's Price/Earnings is on the same level as the industry average.
FAF's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.21.
The Price/Forward Earnings ratio is 9.60, which indicates a very decent valuation of FAF.
FAF's Price/Forward Earnings ratio is in line with the industry average.
FAF's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 20.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.46 | ||
| Fwd PE | 9.6 |
4.2 Price Multiples
FAF's Enterprise Value to EBITDA is on the same level as the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as FAF.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.06 | ||
| EV/EBITDA | 11.96 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as FAF's earnings are expected to grow with 15.48% in the coming years.
PEG (NY)0.78
PEG (5Y)N/A
EPS Next 2Y18.87%
EPS Next 3Y15.48%
5. Dividend
5.1 Amount
FAF has a Yearly Dividend Yield of 3.57%.
FAF's Dividend Yield is a higher than the industry average which is at 3.26.
FAF's Dividend Yield is a higher than the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.57% |
5.2 History
The dividend of FAF has a limited annual growth rate of 4.86%.
FAF has been paying a dividend for at least 10 years, so it has a reliable track record.
FAF has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)4.86%
Div Incr Years14
Div Non Decr Years14
5.3 Sustainability
168.34% of the earnings are spent on dividend by FAF. This is not a sustainable payout ratio.
The dividend of FAF is growing, but earnings are growing more, so the dividend growth is sustainable.
DP168.34%
EPS Next 2Y18.87%
EPS Next 3Y15.48%
59.82
-0.7 (-1.16%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.37%
Inst Owner Change-0.02%
Ins Owners1.19%
Ins Owner Change-3.51%
Market Cap6.16B
Analysts78
Price Target78.74 (31.63%)
Short Float %1.15%
Short Ratio1.3
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.57% |
Yearly Dividend2.14
Dividend Growth(5Y)4.86%
DP168.34%
Div Incr Years14
Div Non Decr Years14
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)19.23%
Min EPS beat(2)16.55%
Max EPS beat(2)21.9%
EPS beat(4)3
Avg EPS beat(4)5.52%
Min EPS beat(4)-24.48%
Max EPS beat(4)21.9%
EPS beat(8)5
Avg EPS beat(8)1.81%
EPS beat(12)8
Avg EPS beat(12)3.03%
EPS beat(16)12
Avg EPS beat(16)7.84%
Revenue beat(2)1
Avg Revenue beat(2)-0.94%
Min Revenue beat(2)-5.45%
Max Revenue beat(2)3.57%
Revenue beat(4)1
Avg Revenue beat(4)-1.24%
Min Revenue beat(4)-5.45%
Max Revenue beat(4)3.57%
Revenue beat(8)3
Avg Revenue beat(8)-0.44%
Revenue beat(12)4
Avg Revenue beat(12)-0.7%
Revenue beat(16)8
Avg Revenue beat(16)3.65%
PT rev (1m)0%
PT rev (3m)1.6%
EPS NQ rev (1m)-4.66%
EPS NQ rev (3m)-16.67%
EPS NY rev (1m)-1.59%
EPS NY rev (3m)-5.89%
Revenue NQ rev (1m)-1.53%
Revenue NQ rev (3m)-2.03%
Revenue NY rev (1m)0.08%
Revenue NY rev (3m)-0.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.46 | ||
| Fwd PE | 9.6 | ||
| P/S | 1 | ||
| P/FCF | 9.06 | ||
| P/OCF | 6.86 | ||
| P/B | 1.25 | ||
| P/tB | 2.07 | ||
| EV/EBITDA | 11.96 |
EPS(TTM)4.8
EY8.02%
EPS(NY)6.23
Fwd EY10.42%
FCF(TTM)6.6
FCFY11.03%
OCF(TTM)8.72
OCFY14.58%
SpS59.57
BVpS47.7
TBVpS28.95
PEG (NY)0.78
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.88% | ||
| ROE | 2.67% | ||
| ROCE | 2.57% | ||
| ROIC | 2.04% | ||
| ROICexc | 2.33% | ||
| ROICexgc | 3.12% | ||
| OM | 5.76% | ||
| PM (TTM) | 2.14% | ||
| GM | N/A | ||
| FCFM | 11.08% |
ROA(3y)1.31%
ROA(5y)3.38%
ROE(3y)4.26%
ROE(5y)9.7%
ROIC(3y)2.91%
ROIC(5y)4.71%
ROICexc(3y)3.38%
ROICexc(5y)5.29%
ROICexgc(3y)4.41%
ROICexgc(5y)6.78%
ROCE(3y)3.66%
ROCE(5y)5.93%
ROICexcg growth 3Y-35.82%
ROICexcg growth 5Y-22.59%
ROICexc growth 3Y-36.98%
ROICexc growth 5Y-22.98%
OM growth 3Y-31.37%
OM growth 5Y-18.17%
PM growth 3Y-46.08%
PM growth 5Y-28.45%
GM growth 3YN/A
GM growth 5YN/A
F-Score6
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 3.22 | ||
| Debt/EBITDA | 3.91 | ||
| Cap/Depr | 105.26% | ||
| Cap/Sales | 3.56% | ||
| Interest Coverage | 2.34 | ||
| Cash Conversion | 160.21% | ||
| Profit Quality | 518.08% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score6
WACC8.2%
ROIC/WACC0.25
Cap/Depr(3y)133.56%
Cap/Depr(5y)115.83%
Cap/Sales(3y)3.74%
Cap/Sales(5y)2.92%
Profit Quality(3y)252.58%
Profit Quality(5y)196.49%
High Growth Momentum
Growth
EPS 1Y (TTM)29.38%
EPS 3Y-18.68%
EPS 5Y-5.2%
EPS Q2Q%86.67%
EPS Next Y15.92%
EPS Next 2Y18.87%
EPS Next 3Y15.48%
EPS Next 5YN/A
Revenue 1Y (TTM)2.78%
Revenue growth 3Y-12.33%
Revenue growth 5Y-0.24%
Sales Q2Q%11.07%
Revenue Next Year17.04%
Revenue Next 2Y13.56%
Revenue Next 3Y9.87%
Revenue Next 5YN/A
EBIT growth 1Y-37.21%
EBIT growth 3Y-39.83%
EBIT growth 5Y-18.36%
EBIT Next Year199.67%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y647.2%
FCF growth 3Y-13.76%
FCF growth 5Y-3.37%
OCF growth 1Y153.32%
OCF growth 3Y-9.73%
OCF growth 5Y-0.34%