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.
First American Financial (FAF) Down 1.5% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
It has been about a month since the last earnings report for First American Financial (FAF - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is First American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
FAF Tops Q1 Earnings and Revenue Estimates on Commercial Strength
First American Financial Corporation reported first-quarter 2026 operating earnings of $1.33 per share, which beat the Zacks Consensus Estimate by 25.4% and rose 58.3% year over year. Operating revenues climbed 16.2% to $1.8 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 1.08%.
The quarterly results were supported by robust growth in its Title segment, particularly commercial business, alongside increased average revenue per order and higher investment income. These gains were partly offset by elevated operating expenses.
What’s Behind the Headlines for FAF?
Direct premiums and escrow fees reached $660.2 million, marking a 17.7% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate by 17.7% and our model estimate by 17.7%. Investment income totaled $152.4 million in the first quarter, up 13% year over year, driven by a 12% increase in Title segment investment income, partially offset by losses at the corporate level. The figure was below our estimate and the Zacks Consensus Estimate of $155.2 million. Expenses increased 12.8% to $1.6 billion, caused by higher interest expense, agent premiums, personal costs and other operating expenses. The figure was on par with our estimate of $1.6 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 16.7% year over year to $1.7 billion, which beat the Zacks Consensus Estimate by 1.2%. This was driven by 21% growth in direct premiums and escrow fees, and agent premiums along with steady net investment income. Investment income increased 12% to $154 million, supported by higher interest income from the company's investment portfolio and warehouse lending business.
Adjusted pretax margin expanded 250 bps to 10%. Title open orders grew 8..2% to 182,900, closed orders rose 9%, and average revenue per direct title order increased to $4,229, reflecting a 48% jump in commercial order revenues. This was partly offset by a mix shift toward lower-premium refinance .
Home Warranty: Total revenues rose 2% to $110.3 million, missing our model estimate of $111.2 million. Pretax income climbed 4% year over year to $26 million. The claim loss rate improved to 36%, driven by small reductions in the number and severity of claims. Pretax margin expanded 60 bps to 23.8%.
Corporate: The Corporate segment reported a net pretax loss of $31 million, narrowing from a $35 million loss in the year-ago quarter.
FAF’s Financial Update
First American exited the first quarter of 2026 with cash and cash equivalents of $2.4 billion, up from the 2025-end level. Notes and contracts payable were $1.5 billion, remaining flat from the 2025-end level. Stockholders’ equity was $5.5 billion at the end of the first quarter of 2026, down 0.2% from the 2025-end level. The debt-to-capital ratio was 32.2.
Capital Deployment
The board of directors paid 55 per cent per share in the first quarter. FAF repurchased 0.5 million shares for $33 million in the reported quarter at an average price of $60.21 per share. The company also continued buybacks after the first quarter ended, repurchasing another 0.3 million shares for $18 million at an average price of $61.6 per share through April 24, 2026.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
At this time, First American Financial has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise First American Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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
First American Financial (FAF) Down 1.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for First American Financial (FAF - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is First American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
FAF Tops Q1 Earnings and Revenue Estimates on Commercial Strength
First American Financial Corporation reported first-quarter 2026 operating earnings of $1.33 per share, which beat the Zacks Consensus Estimate by 25.4% and rose 58.3% year over year. Operating revenues climbed 16.2% to $1.8 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 1.08%.
The quarterly results were supported by robust growth in its Title segment, particularly commercial business, alongside increased average revenue per order and higher investment income. These gains were partly offset by elevated operating expenses.
What’s Behind the Headlines for FAF?
Direct premiums and escrow fees reached $660.2 million, marking a 17.7% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate by 17.7% and our model estimate by 17.7%. Investment income totaled $152.4 million in the first quarter, up 13% year over year, driven by a 12% increase in Title segment investment income, partially offset by losses at the corporate level. The figure was below our estimate and the Zacks Consensus Estimate of $155.2 million. Expenses increased 12.8% to $1.6 billion, caused by higher interest expense, agent premiums, personal costs and other operating expenses. The figure was on par with our estimate of $1.6 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 16.7% year over year to $1.7 billion, which beat the Zacks Consensus Estimate by 1.2%. This was driven by 21% growth in direct premiums and escrow fees, and agent premiums along with steady net investment income. Investment income increased 12% to $154 million, supported by higher interest income from the company's investment portfolio and warehouse lending business.
Adjusted pretax margin expanded 250 bps to 10%. Title open orders grew 8..2% to 182,900, closed orders rose 9%, and average revenue per direct title order increased to $4,229, reflecting a 48% jump in commercial order revenues. This was partly offset by a mix shift toward lower-premium refinance .
Home Warranty: Total revenues rose 2% to $110.3 million, missing our model estimate of $111.2 million. Pretax income climbed 4% year over year to $26 million. The claim loss rate improved to 36%, driven by small reductions in the number and severity of claims. Pretax margin expanded 60 bps to 23.8%.
Corporate: The Corporate segment reported a net pretax loss of $31 million, narrowing from a $35 million loss in the year-ago quarter.
FAF’s Financial Update
First American exited the first quarter of 2026 with cash and cash equivalents of $2.4 billion, up from the 2025-end level. Notes and contracts payable were $1.5 billion, remaining flat from the 2025-end level. Stockholders’ equity was $5.5 billion at the end of the first quarter of 2026, down 0.2% from the 2025-end level. The debt-to-capital ratio was 32.2.
Capital Deployment
The board of directors paid 55 per cent per share in the first quarter. FAF repurchased 0.5 million shares for $33 million in the reported quarter at an average price of $60.21 per share. The company also continued buybacks after the first quarter ended, repurchasing another 0.3 million shares for $18 million at an average price of $61.6 per share through April 24, 2026.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
At this time, First American Financial has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise First American Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.