We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FAF Stock Near 52-Week High: A Signal for Investors to Hold Tight?
Read MoreHide Full Article
Key Takeaways
FAF can gain from rising millennial first-time buyers and early stabilization in the housing purchase market.
FAF expects stronger housing demand, improving economy and labor markets to drive home price appreciation.
FAF sees revenue growth from higher direct premiums, escrow fees and title agent premiums.
Shares of First American Financial Corporation (FAF - Free Report) closed at $69.57 on Wednesday, near its 52-week high of $71.47. 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 $64.16 and $62.48, 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, with an average being 22.95%.
Image Source: Zacks Investment Research
FAF is an Outperformer
Shares of First American have risen 13.2% in the year-to-date period against the industry, the Finance sector and the Zacks S&P 500 index’s decline of 3.1%, 2.2%, and 0.8%, respectively.
With a market capitalization of $7.08 billion, the average volume of shares traded in the last three months was 0.9 million.
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 1.44X, the Finance sector’s 4.19X and the Zacks S&P 500 Composite’s 8.23X. 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 Growth Projection Encourages
The Zacks Consensus Estimate for First American’s 2026 earnings per share indicates a year-over-year increase of 4.4%. The consensus estimate for revenues is pegged at $7.96 billion, implying a year-over-year improvement of 6.8%.
The consensus estimate for 2027 earnings per share and revenues indicates an increase of 7.1% and 5.5%, respectively, from the corresponding 2026 estimates. FAF has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
Average Target Price for FAF Suggests Upside
Based on short-term price targets offered by five analysts, the Zacks average price target is $81.60 per share. The average suggests a potential 16.6% upside from the last closing price.
Image Source: Zacks Investment Research
FAF’s Favorable Return on Capital
First American’s return on equity of 11.9% for the trailing 12 months compared favorably with the industry’s 8%, 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 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.
Conclusion
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.
FAF also has a VGM Score of A. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. First American should also benefit from the impressive dividend history, solid growth projections and higher return on equity, 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.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
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 $69.57 on Wednesday, near its 52-week high of $71.47. 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 $64.16 and $62.48, 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, with an average being 22.95%.
Image Source: Zacks Investment Research
FAF is an Outperformer
Shares of First American have risen 13.2% in the year-to-date period against the industry, the Finance sector and the Zacks S&P 500 index’s decline of 3.1%, 2.2%, and 0.8%, respectively.
With a market capitalization of $7.08 billion, the average volume of shares traded in the last three months was 0.9 million.
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 1.44X, the Finance sector’s 4.19X and the Zacks S&P 500 Composite’s 8.23X. 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 Growth Projection Encourages
The Zacks Consensus Estimate for First American’s 2026 earnings per share indicates a year-over-year increase of 4.4%. The consensus estimate for revenues is pegged at $7.96 billion, implying a year-over-year improvement of 6.8%.
The consensus estimate for 2027 earnings per share and revenues indicates an increase of 7.1% and 5.5%, respectively, from the corresponding 2026 estimates. FAF has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
Average Target Price for FAF Suggests Upside
Based on short-term price targets offered by five analysts, the Zacks average price target is $81.60 per share. The average suggests a potential 16.6% upside from the last closing price.
Image Source: Zacks Investment Research
FAF’s Favorable Return on Capital
First American’s return on equity of 11.9% for the trailing 12 months compared favorably with the industry’s 8%, 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 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.
Conclusion
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.
FAF also has a VGM Score of A. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. First American should also benefit from the impressive dividend history, solid growth projections and higher return on equity, 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.