Core Viewpoint - First American Financial Corporation (FAF) has shown a year-to-date share price increase of 3.7%, which is below the industry growth of 15.3% but better than the Finance sector's decline of 1.3% and the Zacks S&P 500 composite's decrease of 8.7% [1] Group 1: Performance Metrics - FAF shares are trading significantly above the 50-day moving average, indicating a bullish trend [1] - The average target price for FAF is $76.20 per share, suggesting a potential upside of 17.7% from the last closing price [5] - FAF shares are trading at a price-to-book multiple of 1.35, which is lower than the industry average of 1.65, providing a better entry point for investors [6] Group 2: Market Drivers - Increased demand among millennials for first-time home purchases, expansion of valuation and data businesses, and strength in commercial business are expected to positively impact FAF's performance [2][12] - FAF anticipates modest improvement in both residential purchase and refinance businesses for 2025, driven by housing demand and an improving economy [13] - The company is focused on enhancing its product offerings and expanding its valuation and data businesses, which should drive increased efficiency and margin expansion [14] Group 3: Financial Health - The Zacks Consensus Estimate for 2025 earnings indicates a 19.3% year-over-year increase, while the estimate for 2026 suggests a 17.1% increase [11] - FAF's return on equity in the trailing 12 months was 9.3%, slightly above the industry average of 8.3%, while its return on invested capital (ROIC) was 2.9%, lower than the industry average of 6.4% [17] Group 4: Shareholder Returns - First American distributes wealth to shareholders through dividend hikes and share buybacks, with a dividend yield and payout ratio that exceed the industry average, making it attractive for yield-seeking investors [15]

Company Overview - First American Financial (FAF) is based in Santa Ana and operates in the Finance sector, with a year-to-date share price change of 3.72% [3] - The company currently pays a dividend of $0.54 per share, resulting in a dividend yield of 3.34%, significantly higher than the Insurance - Property and Casualty industry's yield of 0.66% and the S&P 500's yield of 1.65% [3] Dividend Performance - The current annualized dividend of $2.16 represents a 0.9% increase from the previous year [4] - Over the past five years, FAF has increased its dividend five times, achieving an average annual increase of 4.66% [4] - The company's payout ratio stands at 49%, indicating that it distributes 49% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, FAF anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 projected at $5.25 per share, reflecting a year-over-year growth rate of 19.32% [5] Investment Considerations - Dividends are favored by investors for various reasons, including improving stock investing profits and providing tax advantages [6] - While tech start-ups and high-growth businesses rarely offer dividends, larger companies with established profits typically do [7] - FAF is positioned as a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7]

Company Overview - First American Financial (FAF) is headquartered in Santa Ana and operates in the Finance sector, with a stock price change of 4.04% since the beginning of the year [3]. Dividend Information - FAF currently pays a dividend of $0.54 per share, resulting in a dividend yield of 3.33%, which is significantly higher than the Insurance - Property and Casualty industry's yield of 0.59% and the S&P 500's yield of 1.57% [3]. - The annualized dividend of $2.16 has increased by 0.9% from the previous year, and over the past five years, the company has raised its dividend five times, averaging an annual increase of 4.66% [4]. Earnings Growth Expectations - For the fiscal year, FAF anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 projected at $5.28 per share, indicating a year-over-year growth rate of 20% [5]. Investment Appeal - FAF is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold), making it an attractive option for income investors [7].

Core Viewpoint - First American Financial Corporation (FAF) is experiencing a short-term bullish trend as it trades above its 50-day simple moving average, indicating potential upward momentum in its stock price [1][3]. Company Overview - FAF has a market capitalization of $6.52 billion and an average trading volume of 0.4 million shares over the last three months. The company has a strong track record, beating earnings estimates in three of the last four quarters with an average beat of 5.56% [2]. Valuation Metrics - FAF shares are currently trading at a price-to-book multiple of 1.36, which is lower than the industry average of 1.55, suggesting that the shares are undervalued and present a better entry point for investors. The company has a Value Score of B [4]. Growth Projections - The Zacks Consensus Estimate projects a 20.6% year-over-year increase in FAF's earnings per share for 2025, with revenues expected to reach $7.14 billion, reflecting a 16.5% improvement. For 2026, earnings per share and revenues are estimated to increase by 10.2% and 10.4%, respectively [6][7]. Price Performance - Over the past year, FAF shares have gained 9.8%, although this underperformed the industry growth of 24.5%, the Finance sector's return of 20.6%, and the S&P 500's appreciation of 15.7% [9]. Market Drivers - Increased demand for first-time home purchases among millennials, along with an improving economy and labor market, is expected to drive home price appreciation, benefiting FAF. The company is well-positioned for long-term growth due to its leadership in title data, strong distribution relationships, prudent underwriting, and ongoing technology investments [10]. Revenue Drivers - The growth in direct premiums, escrow fees, and title agent premiums is anticipated to continue driving FAF's top line. The company is focused on enhancing its product offerings, strengthening its core business, and expanding its valuation and data services [11]. Shareholder Returns - FAF has a history of returning wealth to shareholders through dividend increases and share buybacks, with dividends showing an 8.2% compound annual growth rate (CAGR) from 2016 to 2024, yielding 3.4%, which outperforms the industry average of 0.2% [12]. Final Assessment - The combination of increased demand for home purchases, a favorable rate environment, and strong commercial business positions FAF positively. The solid dividend yield further enhances its attractiveness as an investment [13][14].

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence through daily updates, research reports, and stock screens [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated A, B, C, D, or F based on value, growth, and momentum characteristics, with higher scores indicating better performance potential [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Value Score - The Value Score identifies undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales to find attractive investment opportunities [3] Growth Score - The Growth Score assesses a company's financial health and future growth potential by analyzing earnings, sales, and cash flow [4] Momentum Score - The Momentum Score helps investors capitalize on price trends by evaluating recent price changes and earnings estimate revisions [5] VGM Score - The VGM Score combines the three Style Scores to identify stocks with the best overall value, growth, and momentum characteristics [6] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to simplify stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988 [7][8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] Company Spotlight: First American Financial (FAF) - First American Financial, based in Santa Ana, CA, provides services for homebuyers, sellers, and real estate professionals, and was founded in January 2008 [12] - FAF holds a Zacks Rank of 3 (Hold) and has a VGM Score of B, with a Momentum Style Score of B and a 3.9% increase in share price over the past four weeks [13][14] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate increasing by $0.03 to $5.35 per share, alongside an average earnings surprise of 5.6% [13]

Financial Performance - The Company's total revenues for 2024 were $6.1 billion, reflecting an increase of $124.6 million, or 2.1%, compared to $6.0 billion for 2023[181]. - The home warranty segment's revenues increased by $8.5 million, or 2.0%, in 2024 compared to 2023[180]. - Net income attributable to the Company for 2024 was $131.1 million, a decrease of 39.5% from $216.8 million in 2023 and 50.1% from $263.0 million in 2022[215]. - Cash provided by operating activities totaled $897.5 million in 2024, compared to $354.3 million in 2023 and $777.6 million in 2022[218]. Premiums and Claims - The provision for title insurance losses for 2024 was 3.0% of title insurance premiums and escrow fees, reflecting an ultimate loss rate of 3.75% for the current policy year[161]. - Known title claims were $55.3 million in 2024, representing 4.6% of total claims, compared to $55.5 million, or 4.3%, in 2023[159]. - IBNR title claims decreased to $1,109.4 million in 2024 from $1,186.5 million in 2023, accounting for 93.0% of total title claims[159]. - The provision for policy losses and other claims was 3.0% in 2024, down from 3.25% in 2023 and 4.0% in 2022[196]. - The provision for home warranty claims as a percentage of premiums decreased to 46.4% in 2024 from 48.8% in 2023 and 51.3% in 2022, reflecting improved claims management[206]. Investment Performance - The Company's net investment losses for 2024 were $401.6 million, compared to $206.4 million in the prior year[181]. - Net investment gains for 2024 totaled $1.4 million, a significant recovery from losses of $6.0 million in 2023 and $12.5 million in 2022, primarily due to increases in fair values of marketable equity securities[204]. - Net investment losses amounted to $57.5 million in 2024, down from $162.3 million in 2023 and $353.4 million in 2022, indicating a significant reduction in investment impairments[209]. Operating Expenses - Personnel costs increased by $77.2 million, or 4.1%, in 2024 from 2023, while they decreased by $396.9 million, or 17.5%, in 2023 from 2022[193]. - Other operating expenses rose by $54.8 million, or 5.8%, in 2024 from 2023, but decreased by $217.7 million, or 18.8%, in 2023 from 2022[195]. - Depreciation and amortization expense increased by $18.6 million, or 10.1%, in 2024 from 2023, and by $21.3 million, or 13.1%, in 2023 from 2022[199]. Debt and Capital Structure - The Company's debt to capitalization ratio was 30.8% as of December 31, 2024, compared to 28.6% in 2023[228]. - The Company issued $450.0 million of 5.45% senior unsecured notes due in 2034 in September 2024[224]. - The Company had no outstanding borrowings under its credit facility as of December 31, 2024 and 2023, with a facility limit of $900.0 million[242]. Shareholder Returns - The quarterly cash dividend was increased to 54 cents per common share in September 2024, representing a 2% increase[220]. - The Company repurchased and retired 1.2 million shares of its common stock for a total purchase price of $68.5 million in 2024, with a total of 4.7 million shares repurchased under the current authorization for $254.6 million[221]. Market and Economic Conditions - The Mortgage Bankers Association reported a 22.0% increase in residential mortgage originations in the U.S. for 2024 compared to 2023, with refinance originations increasing by 124.2%[182]. - The level of domestic title orders opened per day remained flat in 2024 compared to 2023, while residential refinance opened orders per day increased by 20.2%[183]. Reserves and Claims Management - The total loss reserves as of December 31, 2024, amounted to $1,193.4 million, a decrease from $1,282.4 million in 2023[159]. - As of December 31, 2024, the IBNR claims reserve was $1.1 billion, with a reasonable estimate range of $965.8 million to $1.2 billion[197]. - A 50 basis point change in expected ultimate losses for the last six policy years could impact the IBNR reserve by $159.0 million[157]. Segment Performance - The title insurance and services segment saw an increase in direct premiums and escrow fees totaling $191.9 million, or 10.3%, driven by domestic residential refinance transactions, residential purchase transactions, and domestic commercial transactions[181]. - The home warranty segment currently operates in 36 states and the District of Columbia, selling residential service contracts[152]. - Home warranty segment recorded pretax margins of 15.1%, 13.0%, and 10.6% for 2024, 2023, and 2022, respectively, showing a positive trend in profitability[207].

Financial Data and Key Metrics Changes - The company reported GAAP earnings of $0.69 per diluted share and adjusted earnings of $1.35 per diluted share for Q4 2024 [16] - Adjusted pretax title margin for the year was 10.3%, while for Q4 it was 11.8% [9][20] - Investment income in Q4 was $155 million, exceeding expectations, with a success ratio of 51% on net operating revenue growth of 25% [10][19] Business Line Data and Key Metrics Changes - Title segment revenue was $1.6 billion, up 22% compared to Q4 2023, with purchase revenue increasing by 18% and commercial revenue growing by 47% [17] - Closed orders increased by 4%, and average revenue per order surged by 39% [18] - Home warranty segment revenue grew by 4%, with an adjusted pretax margin of 18.2% [21] Market Data and Key Metrics Changes - For the four weeks ending February 7, purchase orders were up 1% and refinance orders were up 43% compared to the same period last year [11] - The commercial business started strong in January with revenues up 24% [12] Company Strategy and Development Direction - The company is focused on investing in its business despite challenging market conditions, particularly in residential purchase and refinance markets [8] - Strategic initiatives include optimizing the information technology environment and rebalancing the investment portfolio [8] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was a challenging year due to low inventory, high home prices, and elevated mortgage rates [7] - For 2025, the company anticipates modest improvement in residential purchase and refinance businesses, with expectations for continued strength in the commercial market [11][13] Other Important Information - The company expressed concern for employees and customers affected by recent wildfires in the Los Angeles area, emphasizing its commitment to community support [14] Q&A Session Summary Question: Insights on commercial business results - Management indicated broad-based strength in commercial business, with revenue up 47% in Q4 and 24% in January [25][27] Question: Growth expectations for the second half of next year - Management expressed confidence in growth despite uncertainties in the market, suggesting potential for continued strength [29][30] Question: Title revenue growth expectations - Management expects growth in line with industry projections, with tailwinds in all major markets [36][40] Question: Margin expectations - Management indicated that margins could improve with modest tailwinds and continued cost control [41][42] Question: Impact of strategic portfolio rebalancing on margins - Management confirmed a projected $42 million increase in investment income due to the rebalancing project, which could translate to approximately 50 basis points in margin improvement [46][50] Question: Investment income run rate for 2025 - Management expects growth in investment income year-over-year, despite potential headwinds from Fed rate cuts [54][58] Question: Office market activity - Management noted that while office was not a significant component of commercial revenue, there is an increase in suburban office activity [86][87] Question: Home warranty market dynamics - Management agreed that a buyer-driven market could lead to increased activity in home warranty sales [88][89]

First American Financial Corporation (NYSE:FAF) Q4 2024 Earnings Conference Call February 13, 2025 11:00 AM ET Company Participants Craig Barberio - Vice President, Investor Relations Ken DeGiorgio - Chief Executive Officer Mark Seaton - Executive Vice President and Chief Financial Officer Conference Call Participants Mark DeVries - Deutsche Bank Terry Ma - Barclays Bose George - KBW John Campbell - Stephens Inc. Mark Hughes - Truist Securities Operator Greetings. Welcome to First American Financial Corpora ...

First American Financial Corporation (FAF) reported fourth-quarter 2024 operating income per share of 1.35, which beat the Zacks Consensus Estimate by 26%. The bottom line increased 95.6% year over year.See the Zacks Earnings Calendar to stay ahead of market-making news.Total revenues of $1.7 billion increased 18% year over year due to higher direct premiums and escrow fees, agent premiums, information and other, net investment income. The top line beat the Zacks Consensus Estimate by 2.7%.The insurer’s mix ...

First American Financial (FAF) reported $1.69 billion in revenue for the quarter ended December 2024, representing a year-over-year increase of 17.9%. EPS of $1.35 for the same period compares to $0.69 a year ago.The reported revenue represents a surprise of +2.78% over the Zacks Consensus Estimate of $1.64 billion. With the consensus EPS estimate being $1.07, the EPS surprise was +26.17%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare ...