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Here's Why Fidelity National (FNF) is Up 26% in 6 Months

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Fidelity National Financial (FNF - Free Report) shares have gained 26.2% in six months compared with the industry's increase of 23.3% and the Finance sector’s increase of 22.7%. The Zacks S&P 500 composite has risen 22.6% in the said time frame. With market capitalization of $11.3 billion, average volume of shares traded in the last three months was 1.8 million.



Leading market share in the residential purchase, refinance, and commercial markets, efforts to diversify from core title insurance business, industry-leading margins and solid capital position continue to drive Fidelity National. The company has a solid history of delivering earnings surprise in the last seven reported quarters.

The company has been efficiently improving return on equity (ROE) since 2015. Its ROE of 20.1% in the trailing twelve months was better than the industry average of 5.6%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 earnings has moved up 11.1% in the past 60 days, reflecting analysts’ optimism. The consensus estimate indicates year-over-year increase of 0.6%.

This Zacks Rank #2 (Buy) largest title insurance and settlement services provider in the nation acquired FGL Holdings, a life and annuity insurance company in June 2020. The company estimates the acquisition to be more than 10% accretive to 2020 bottom line and more than 20% to 2021 bottom line. FGL Holdings is a leading provider of annuity and life insurance, concentrated in the middle-income market. This marks a strategic initiative to diversify from core title insurance business and lower risk and volatility integral to the core title insurance business.

The company boasts industry-leading margins. Given its continued focus on managing its expenses, we expect the momentum to continue.

Strategic investments in its digital platform by expanding the WireSafe and startSafe programs, enhancing core title production system technologies and integrations and advancing automated title and underwriting capabilities bode well.

Its balance sheet strength and sustained profitability of title business place the company well to take advantage of strategic opportunities.

Fidelity National has a solid track record of enhancing shareholder value. The title insurer has increased dividend for nine straight years and its dividend yield of 3.7% betters the industry average of 0.5%. It also targets $500 million of share repurchases over the next one-year period.

Other Stocks to Consider    

Investors interested in the same space can also look at Alleghany , The Hanover Insurance Group (THG - Free Report) and The Allstate Corporation (ALL - Free Report) .    

Alleghany delivered an earnings surprise of 195.85% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank.

The Hanover Insurance Group delivered an earnings surprise of 9.85% in the last reported quarter. It currently carries a Zacks Rank #2.

Allstate delivered an earnings surprise of 66.10% in the last reported quarter. It currently carries a Zacks Rank #2.

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