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Fidelity National (FNF) Up 84% in a Year: Will the Rally Last?

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Fidelity National Financial (FNF - Free Report) shares have gained 84.2% in a year compared with the industry's increase of 48.9% and the Finance sector’s increase of 78.9%. The Zacks S&P 500 composite has risen 76.6% in the said time frame. With market capitalization of $11.5 billion, average volume of shares traded in the last three months was 2.1 million.

Its 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 beat earnings estimates in the last eight reported quarters.

Return on equity of 22.6% in the trailing twelve months was better than the industry average of 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 earnings has moved up 7.6% in the past 30 days, reflecting analysts’ optimism.

A low interest rate environment has been benefiting Fidelity National as the company continues to witness momentum in refinance volumes, strong purchase demand and rebound in commercial real estate activity.

Technological investments in inHere Experience Platform and Close inhere bodes well for its Title business.

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

In its efforts to diversify from core title insurance business and lower risk and volatility integral to the core title insurance business, the company acquired FGL Holdings, a life and annuity insurance company focusing in the middle-income market, in June 2020. Also, the company intends to utilize the proceeds from the divestment of offshore third-party reinsurance business, F&G Re to Aspida Holdings in December 2020 in growth opportunities.

This Zacks Rank #2 (Buy) title insurer boasts a strong capital position. The title insurer has raised dividend for 10 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.

The stock carries an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Other Stocks to Consider

Some other top-ranked stocks from the same space include Markel (MKL - Free Report) , CNA Financial (CNA - Free Report) and Alleghany (Y - Free Report) .
Markel delivered an earnings surprise of 75.11% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial delivered an earnings surprise of 16.04% in the last reported quarter. It carries a Zacks Rank #2 (Buy).

Alleghany delivered an earnings surprise of 48.79% in the last reported quarter. It carries a Zacks Rank #2.

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