First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2019 operating income per share of $1.80, which outperformed the Zacks Consensus Estimate by 33.3%. Moreover, the bottom line improved 41.7%.
Increase in investment income and improved segmental performance were partially offset by increase in expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
Behind the Headlines
Operating revenues of $1.7 billion increased 22% year over year and beat the Zacks Consensus Estimate by 6.9%.
Net investment income grew 24.5% to $78.8 million.
Closed title orders increased 27%, attributable to 131% increase in refinance orders.
Average revenue per order decreased 8%, driven by the shift to refinance transactions.
Total expense of $1.4 billion increased 10.9% year over year, attributable to increase in personnel costs, premiums retained by agents, other operating expenses, premium taxes and interest.
Full-Year Highlights
Operating income per share of $5.76 outpaced the Zacks Consensus Estimate of $5.38. Moreover, the bottom line surged 25.8%.
Revenues of $6.2 billion increased 8% from 2018 and beat the Zacks Consensus Estimate by 1.8%.
Segment Results
Title Insurance and Services: Total revenues increased 21.1% year over year to $1.6 billion.
Pre-tax margin expanded 740 bps.
Direct open orders increased 24.4% to $251.7 billion while Direct closed orders increased 27% to $224.2 billion year over year.
Specialty Insurance: Total revenues increased 17.9% year over year to $131.6 million.
Pre-tax margin was 16.7%, much higher than 0.7% in the year-ago quarter.
Financial Update
First American exited 2019 with cash and cash equivalents of $1.5 billion, up 1.3% year over year. Notes and contracts payable were $728 million, down 0.5% year over year.
First American exited 2019 with stockholders’ equity of $4.4 billion, up 18.1% year over year.
Return on equity was 17.3% in 2019.
Cash flow from operations was $913.1 million, up 15% from 2018.
Zacks Rank
First American currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Insurance Releases
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while that of Principal Financial (PFG - Free Report) matched the same.
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First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2019 operating income per share of $1.80, which outperformed the Zacks Consensus Estimate by 33.3%. Moreover, the bottom line improved 41.7%.
Increase in investment income and improved segmental performance were partially offset by increase in expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
Behind the Headlines
Operating revenues of $1.7 billion increased 22% year over year and beat the Zacks Consensus Estimate by 6.9%.
Net investment income grew 24.5% to $78.8 million.
Closed title orders increased 27%, attributable to 131% increase in refinance orders.
Average revenue per order decreased 8%, driven by the shift to refinance transactions.
Total expense of $1.4 billion increased 10.9% year over year, attributable to increase in personnel costs, premiums retained by agents, other operating expenses, premium taxes and interest.
Full-Year Highlights
Operating income per share of $5.76 outpaced the Zacks Consensus Estimate of $5.38. Moreover, the bottom line surged 25.8%.
Revenues of $6.2 billion increased 8% from 2018 and beat the Zacks Consensus Estimate by 1.8%.
Segment Results
Title Insurance and Services: Total revenues increased 21.1% year over year to $1.6 billion.
Pre-tax margin expanded 740 bps.
Direct open orders increased 24.4% to $251.7 billion while Direct closed orders increased 27% to $224.2 billion year over year.
Specialty Insurance: Total revenues increased 17.9% year over year to $131.6 million.
Pre-tax margin was 16.7%, much higher than 0.7% in the year-ago quarter.
Financial Update
First American exited 2019 with cash and cash equivalents of $1.5 billion, up 1.3% year over year. Notes and contracts payable were $728 million, down 0.5% year over year.
First American exited 2019 with stockholders’ equity of $4.4 billion, up 18.1% year over year.
Return on equity was 17.3% in 2019.
Cash flow from operations was $913.1 million, up 15% from 2018.
Zacks Rank
First American currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Insurance Releases
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while that of Principal Financial (PFG - Free Report) matched the same.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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