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FAF Stock Near 52-Week High: A Signal for Investors to Hold Tight?
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Key Takeaways
FAF expects modest improvement in both residential purchase and refinance businesses for 2025.
Direct premiums, escrow fees, and title agent premiums are expected to continue driving top-line growth.
Favorable growth estimates, improving commercial business and affordable shares boost FAFs long-term outlook.
Shares of First American Financial Corporation (FAF - Free Report) closed at $64.88 on Tuesday, near its 52-week high of $70.92. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $60.25 and $62.07, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
First American has a solid surprise history. The insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 20.30%.
Image Source: Zacks Investment Research
FAF’s Price Performance
Shares of this insurer have gained 4.2% in the past year. It, however, underperformed the industry’s growth of 6.8%.
Image Source: Zacks Investment Research
FAF’s Growth Projection Encourages
The Zacks Consensus Estimate for First American’s 2025 earnings per share indicates a year-over-year increase of 16.1%. The consensus estimate for revenues is pegged at $7.10 billion, implying a year-over-year improvement of 15.8%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 18.9% and 9%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for FAF
Each of the three analysts covering the stock has raised estimates for 2025, while two analysts have raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved north 2.6% and 1.2%, respectively, in the past 30 days.
Image Source: Zacks Investment Research
Average Target Price for FAF Suggests Upside
Based on short-term price targets offered by four analysts, the Zacks average price target is $77 per share. The average suggests a potential 20.4% upside from the last closing price.
Image Source: Zacks Investment Research
FAF Shares are Affordable
First American shares are trading at a discount to the industry. Its forward price-to-book value of 1.28X is lower than the industry average of 1.52X, the Finance sector’s 4.02X and the Zacks S&P 500 Composite’s 8.32X. The insurer has a Value Score of A.
Shares of RenaissanceRe Holdings Ltd. (RNR - Free Report) , NMI Holdings Inc. (NMIH - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) are also trading at a discount to the industry average.
Image Source: Zacks Investment Research
FAF’s Favorable Return on Capital
First American’s return on equity (ROE) of 10.4% for the trailing 12 months compared favorably with the industry’s 7.6%, reflecting the company’s efficiency in utilizing shareholders’ funds.
Key Drivers of FAF Stock
First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology positions FAF well for long-term growth.
FAF expects modest improvement in both residential purchase and refinance businesses for 2025. The company is witnessing early stabilization in the purchase market and thus expects housing demand, improving economy and labor markets to continue to drive home price appreciation.
Growing direct premiums, escrow fees and title agent premiums should continue to drive the top line.
The title insurer stays focused on strengthening its product offerings, enhancing its core business and expanding valuation and data businesses. Also, the expansion of title plant assets and the upgrade of technology solutions drive increased efficiency.
First American distributes wealth to shareholders via dividend hikes and share buybacks. Its dividend yield as well as payout ratio is better than the industry average, making it an attractive pick for yield-seeking investors.
End Notes
Increased demand among millennials for first-time home purchases, improved rate environment and strength in commercial business should favor FAF’s results. The solid dividend yield is another positive.
First American should also benefit from favorable growth estimates, as well as the affordability of shares. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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FAF Stock Near 52-Week High: A Signal for Investors to Hold Tight?
Key Takeaways
Shares of First American Financial Corporation (FAF - Free Report) closed at $64.88 on Tuesday, near its 52-week high of $70.92. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $60.25 and $62.07, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
First American has a solid surprise history. The insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 20.30%.
Image Source: Zacks Investment Research
FAF’s Price Performance
Shares of this insurer have gained 4.2% in the past year. It, however, underperformed the industry’s growth of 6.8%.
Image Source: Zacks Investment Research
FAF’s Growth Projection Encourages
The Zacks Consensus Estimate for First American’s 2025 earnings per share indicates a year-over-year increase of 16.1%. The consensus estimate for revenues is pegged at $7.10 billion, implying a year-over-year improvement of 15.8%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 18.9% and 9%, respectively, from the corresponding 2025 estimates.
Optimistic Analyst Sentiment for FAF
Each of the three analysts covering the stock has raised estimates for 2025, while two analysts have raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved north 2.6% and 1.2%, respectively, in the past 30 days.
Image Source: Zacks Investment Research
Average Target Price for FAF Suggests Upside
Based on short-term price targets offered by four analysts, the Zacks average price target is $77 per share. The average suggests a potential 20.4% upside from the last closing price.
Image Source: Zacks Investment Research
FAF Shares are Affordable
First American shares are trading at a discount to the industry. Its forward price-to-book value of 1.28X is lower than the industry average of 1.52X, the Finance sector’s 4.02X and the Zacks S&P 500 Composite’s 8.32X. The insurer has a Value Score of A.
Shares of RenaissanceRe Holdings Ltd. (RNR - Free Report) , NMI Holdings Inc. (NMIH - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) are also trading at a discount to the industry average.
Image Source: Zacks Investment Research
FAF’s Favorable Return on Capital
First American’s return on equity (ROE) of 10.4% for the trailing 12 months compared favorably with the industry’s 7.6%, reflecting the company’s efficiency in utilizing shareholders’ funds.
Key Drivers of FAF Stock
First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology positions FAF well for long-term growth.
FAF expects modest improvement in both residential purchase and refinance businesses for 2025. The company is witnessing early stabilization in the purchase market and thus expects housing demand, improving economy and labor markets to continue to drive home price appreciation.
Growing direct premiums, escrow fees and title agent premiums should continue to drive the top line.
The title insurer stays focused on strengthening its product offerings, enhancing its core business and expanding valuation and data businesses. Also, the expansion of title plant assets and the upgrade of technology solutions drive increased efficiency.
First American distributes wealth to shareholders via dividend hikes and share buybacks. Its dividend yield as well as payout ratio is better than the industry average, making it an attractive pick for yield-seeking investors.
End Notes
Increased demand among millennials for first-time home purchases, improved rate environment and strength in commercial business should favor FAF’s results. The solid dividend yield is another positive.
First American should also benefit from favorable growth estimates, as well as the affordability of shares. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.