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First American Financial Up 27% in a Year: What's Driving it?
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First American Financial Corporation (FAF - Free Report) is currently riding on high premium growth and acquisitions, which are aiding top-line growth.
It has been gaining on increased revenues and investment income.
Shares of the Zacks Rank #2 (Buy) company have gained 27.3% in a year compared with the industry’s rise of 3.8%.
What’s Driving the Stock?
The company continues to perform well on top-line growth, stemming from high premiums and escrow fees, agent premiums, and net investment income. The momentum also continued in 2019, with revenues rising 8%. Revenues also seem to benefit from strong performance across the company’s operating segments — Title Insurance, and Services & Specialty Insurance. Net investment income is also considered as an important top-line growth driver. The metric increased nearly 37% in 2019.
First American Financial also banks on several buyouts to strengthen its core business along with expanding its valuation and data businesses. Recently, it completed the buyout of software solutions provider, Docutech, for around $350 million. The acquisition showcases the company’s intention to boost the home-buying experience for consumers and drive the digital transformation of the real estate settlement process. Another notable buyout of the company in 2020 is Title Security Agency, a premier brand in the real estate community.
The company’s strong balance sheet is also commendable. Its cash position grew, witnessing a 13.9% CAGR, in the last four years (2016-2019). Such a strong position indicates financial flexibility for the company.
First American Financial has an impressive history of returning capital to shareholders in the form of dividends. The company has been consistently increasing its dividend payout each year and witnessed a 5-year CAGR (2014-2019) of 28.5%.
In January 2020, it raised its quarterly cash dividend by 5% to 44 cents per share from its prior payout of 42 cents. Such shareholder-friendly moves reflect the company’s strong operational efficiencies. Its dividend yield is currently 2.6%, way above the industry average of 0.4%.
Is Further Upside Left?
We expect First American Financial to witness a consistent price surge on its solid fundamentals such as buyouts and strong capital position.
The company has witnessed its 2020 estimates being revised 4.1% upward over the past 30 days.
Its return on equity — a profitability measure — of 15.7% is higher than the industry's average of 6.8%, which remains an added positive.
Other Stocks to Consider
Some other top-ranked stocks in the same space are CNA Financial Corporation (CNA - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) , and Cincinnati Financial Corporation (CINF - Free Report) . While CNA Financial currently sports a Zacks Rank #1 (Strong Buy), Axis Capital and Cincinnati Financial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
All three companies surpassed estimates in the last reported quarters by 33.33%, 150% and 10.81%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
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First American Financial Up 27% in a Year: What's Driving it?
First American Financial Corporation (FAF - Free Report) is currently riding on high premium growth and acquisitions, which are aiding top-line growth.
It has been gaining on increased revenues and investment income.
Shares of the Zacks Rank #2 (Buy) company have gained 27.3% in a year compared with the industry’s rise of 3.8%.
What’s Driving the Stock?
The company continues to perform well on top-line growth, stemming from high premiums and escrow fees, agent premiums, and net investment income. The momentum also continued in 2019, with revenues rising 8%. Revenues also seem to benefit from strong performance across the company’s operating segments — Title Insurance, and Services & Specialty Insurance. Net investment income is also considered as an important top-line growth driver. The metric increased nearly 37% in 2019.
First American Financial also banks on several buyouts to strengthen its core business along with expanding its valuation and data businesses. Recently, it completed the buyout of software solutions provider, Docutech, for around $350 million. The acquisition showcases the company’s intention to boost the home-buying experience for consumers and drive the digital transformation of the real estate settlement process. Another notable buyout of the company in 2020 is Title Security Agency, a premier brand in the real estate community.
The company’s strong balance sheet is also commendable. Its cash position grew, witnessing a 13.9% CAGR, in the last four years (2016-2019). Such a strong position indicates financial flexibility for the company.
First American Financial has an impressive history of returning capital to shareholders in the form of dividends. The company has been consistently increasing its dividend payout each year and witnessed a 5-year CAGR (2014-2019) of 28.5%.
In January 2020, it raised its quarterly cash dividend by 5% to 44 cents per share from its prior payout of 42 cents. Such shareholder-friendly moves reflect the company’s strong operational efficiencies. Its dividend yield is currently 2.6%, way above the industry average of 0.4%.
Is Further Upside Left?
We expect First American Financial to witness a consistent price surge on its solid fundamentals such as buyouts and strong capital position.
The company has witnessed its 2020 estimates being revised 4.1% upward over the past 30 days.
Its return on equity — a profitability measure — of 15.7% is higher than the industry's average of 6.8%, which remains an added positive.
Other Stocks to Consider
Some other top-ranked stocks in the same space are CNA Financial Corporation (CNA - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) , and Cincinnati Financial Corporation (CINF - Free Report) . While CNA Financial currently sports a Zacks Rank #1 (Strong Buy), Axis Capital and Cincinnati Financial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
All three companies surpassed estimates in the last reported quarters by 33.33%, 150% and 10.81%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>