FIRST AMERICAN FINANCIAL (FAF) Stock Fundamental Analysis
NYSE:FAF - New York Stock Exchange, Inc. - US31847R1023 - Common Stock - Currency: USD
FAF gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 142 industry peers in the Insurance industry. FAF has a bad profitability rating. Also its financial health evaluation is rather negative. FAF has a correct valuation and a medium growth rate. FAF also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
FAF had positive earnings in the past year.
In the past year FAF had a positive cash flow from operations.
Each year in the past 5 years FAF has been profitable.
Each year in the past 5 years FAF had a positive operating cash flow.
1.2 Ratios
FAF's Return On Assets of 1.02% is in line compared to the rest of the industry. FAF outperforms 42.25% of its industry peers.
FAF has a Return On Equity of 3.16%. This is in the lower half of the industry: FAF underperforms 78.17% of its industry peers.
The Return On Invested Capital of FAF (2.08%) is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for FAF is in line with the industry average of 4.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.02% | ||
| ROE | 3.16% | ||
| ROIC | 2.08% |
ROA(3y)1.31%
ROA(5y)3.38%
ROE(3y)4.26%
ROE(5y)9.7%
ROIC(3y)2.91%
ROIC(5y)4.71%
1.3 Margins
Looking at the Profit Margin, with a value of 2.52%, FAF is doing worse than 74.65% of the companies in the same industry.
FAF's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 6.06%, FAF is doing worse than 71.83% of the companies in the same industry.
FAF's Operating Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.06% | ||
| PM (TTM) | 2.52% | ||
| 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so FAF is destroying value.
FAF has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, FAF has less shares outstanding
Compared to 1 year ago, FAF has a worse debt to assets ratio.
2.2 Solvency
FAF has a debt to FCF ratio of 4.02. This is a neutral value as FAF would need 4.02 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.02, FAF is doing worse than 64.08% of the companies in the same industry.
FAF has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.45, FAF is not doing good in the industry: 63.38% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 4.02 | ||
| Altman-Z | N/A |
ROIC/WACC0.25
WACC8.22%
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.
The Earnings Per Share has been decreasing by -5.20% on average over the past years.
FAF shows a small growth in Revenue. In the last year, the Revenue has grown by 2.78%.
The Revenue has been decreasing by -0.24% on average over the past years.
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
Based on estimates for the next years, FAF will show a quite strong growth in Earnings Per Share. The EPS will grow by 16.80% on average per year.
Based on estimates for the next years, FAF will show a quite strong growth in Revenue. The Revenue will grow by 10.02% on average per year.
EPS Next Y17.64%
EPS Next 2Y19%
EPS Next 3Y16.8%
EPS Next 5YN/A
Revenue Next Year16.21%
Revenue Next 2Y13.43%
Revenue Next 3Y10.02%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 11.63, the valuation of FAF can be described as reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of FAF is on the same level as its industry peers.
FAF's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.43.
With a Price/Forward Earnings ratio of 8.94, the valuation of FAF can be described as very reasonable.
Based on the Price/Forward Earnings ratio, FAF is valued a bit cheaper than 60.56% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of FAF to the average of the S&P500 Index (22.17), we can say FAF is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.63 | ||
| Fwd PE | 8.94 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of FAF is on the same level as its industry peers.
FAF's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.13 | ||
| EV/EBITDA | 10.11 |
4.3 Compensation for Growth
FAF's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
FAF's earnings are expected to grow with 16.80% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.66
PEG (5Y)N/A
EPS Next 2Y19%
EPS Next 3Y16.8%
5. Dividend
5.1 Amount
FAF has a Yearly Dividend Yield of 3.93%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.09, FAF pays a better dividend. On top of this FAF pays more dividend than 80.99% of the companies listed in the same industry.
FAF's Dividend Yield is rather good when compared to the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.93% |
5.2 History
The dividend of FAF has a limited annual growth rate of 4.86%.
FAF has paid a dividend for at least 10 years, which is 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
139.66% of the earnings are spent on dividend by FAF. This is not a sustainable payout ratio.
FAF's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP139.66%
EPS Next 2Y19%
EPS Next 3Y16.8%
55.81
+0.05 (+0.09%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.37%
Inst Owner Change-1.21%
Ins Owners1.19%
Ins Owner Change-3.51%
Market Cap5.74B
Analysts78
Price Target78.74 (41.09%)
Short Float %1.48%
Short Ratio1.6
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.93% |
Yearly Dividend2.14
Dividend Growth(5Y)4.86%
DP139.66%
Div Incr Years14
Div Non Decr Years14
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)21.95%
Min EPS beat(2)21.9%
Max EPS beat(2)22.01%
EPS beat(4)4
Avg EPS beat(4)17.15%
Min EPS beat(4)8.13%
Max EPS beat(4)22.01%
EPS beat(8)6
Avg EPS beat(8)8.45%
EPS beat(12)9
Avg EPS beat(12)5.26%
EPS beat(16)12
Avg EPS beat(16)7.88%
Revenue beat(2)2
Avg Revenue beat(2)2.99%
Min Revenue beat(2)2.41%
Max Revenue beat(2)3.57%
Revenue beat(4)2
Avg Revenue beat(4)-0.3%
Min Revenue beat(4)-5.45%
Max Revenue beat(4)3.57%
Revenue beat(8)4
Avg Revenue beat(8)0.43%
Revenue beat(12)4
Avg Revenue beat(12)-1.14%
Revenue beat(16)8
Avg Revenue beat(16)3.21%
PT rev (1m)1.31%
PT rev (3m)1.31%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.73%
EPS NY rev (1m)1.48%
EPS NY rev (3m)0.36%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.44%
Revenue NY rev (1m)-0.71%
Revenue NY rev (3m)-0.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.63 | ||
| Fwd PE | 8.94 | ||
| P/S | 0.91 | ||
| P/FCF | 10.13 | ||
| P/OCF | 7.41 | ||
| P/B | 1.14 | ||
| P/tB | 1.86 | ||
| EV/EBITDA | 10.11 |
EPS(TTM)4.8
EY8.6%
EPS(NY)6.25
Fwd EY11.19%
FCF(TTM)5.51
FCFY9.87%
OCF(TTM)7.54
OCFY13.5%
SpS61.1
BVpS48.78
TBVpS30.01
PEG (NY)0.66
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.02% | ||
| ROE | 3.16% | ||
| ROCE | 2.63% | ||
| ROIC | 2.08% | ||
| ROICexc | 2.43% | ||
| ROICexgc | 3.2% | ||
| OM | 6.06% | ||
| PM (TTM) | 2.52% | ||
| GM | N/A | ||
| FCFM | 9.02% |
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-Score4
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 4.02 | ||
| Debt/EBITDA | 3.86 | ||
| Cap/Depr | 99.29% | ||
| Cap/Sales | 3.31% | ||
| Interest Coverage | 2.46 | ||
| Cash Conversion | 131.25% | ||
| Profit Quality | 357.57% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score4
WACC8.22%
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 Y17.64%
EPS Next 2Y19%
EPS Next 3Y16.8%
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 Year16.21%
Revenue Next 2Y13.43%
Revenue Next 3Y10.02%
Revenue Next 5YN/A
EBIT growth 1Y-32.01%
EBIT growth 3Y-39.83%
EBIT growth 5Y-18.36%
EBIT Next Year194.29%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y54.27%
FCF growth 3Y-13.76%
FCF growth 5Y-3.37%
OCF growth 1Y19.72%
OCF growth 3Y-9.73%
OCF growth 5Y-0.34%