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Are Investors Undervaluing First American Financial (FAF) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is First American Financial (FAF - Free Report) . FAF is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.79 right now. For comparison, its industry sports an average P/E of 24.31. FAF's Forward P/E has been as high as 12.27 and as low as 9.21, with a median of 11.08, all within the past year.

Investors should also note that FAF holds a PEG ratio of 1.07. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FAF's industry currently sports an average PEG of 2.91. FAF's PEG has been as high as 1.12 and as low as 0.71, with a median of 0.99, all within the past year.

Finally, investors should note that FAF has a P/CF ratio of 9.50. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. FAF's P/CF compares to its industry's average P/CF of 13.22. Over the past 52 weeks, FAF's P/CF has been as high as 10.33 and as low as 6.39, with a median of 9.08.

These figures are just a handful of the metrics value investors tend to look at, but they help show that First American Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FAF feels like a great value stock at the moment.


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