First American Financial Corporation (FAF)
Financial Services · NYQ · US
Fundamentals
Valuation and ratings
First American Financial Corporation trades at USD72.01, which is 114% below the USD154.13 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.
Our moat model scores it 66 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 10.7 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About First American Financial Corporation
First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Home Warranty segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services internationally. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; appraisals and other valuation-related products and services; lien release, document custodial, and default-related products and services; document generation services; warehouse lending services; and subservices mortgage loans; as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in various states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, New Zealand, South Korea, and internationally. The Home Warranty segment provides home warranty products, including residential service contracts that cover residential systems, such as heating and air conditioning systems, and certain appliances against failures that occur as the result of normal usage during the coverage period. This segment operates in various states and the District of Columbia. First American Financial Corporation was founded in 1889 and is based in Santa Ana, California.
FAF passes 6 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Smart money ownership
15 of the funds we track reported a position in their latest SEC 13F filing. Largest first:
- John Rogers, ARIEL INVESTMENTS, LLC$462.91M · 2.8% of book
- Capital Research Global, Capital Research Global Investors$93.20M · 0.0% of book
- Ken Griffin, CITADEL ADVISORS LLC$91.67M · 0.0% of book
- Arrowstreet Capital, ARROWSTREET CAPITAL, LIMITED PARTNERSHIP$77.44M · 0.0% of book
- Two Sigma, TWO SIGMA INVESTMENTS, LP$36.06M · 0.0% of book
A word of warning on reading these figures: a 13F reports the market value of a holding, so a fund that traded nothing at all still appears to have sold when the price fell. We found 102 companies where the standard reading gives the opposite answer. Only the share count is honest.
Common questions
Is First American Financial Corporation (FAF) undervalued?
Against our discounted cash flow estimate of USD154.13, FAF at USD72.01 is 114% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
Which funds own FAF?
15 of the institutions we track reported a position in FAF in their most recent SEC 13F filing. A 13F is filed up to 45 days after quarter end, so it tells you what a fund held then, not what it holds now.
What is FAF's P/E ratio?
FAF trades at 10.7 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
The full research page for FAF, with financial statements, ownership detail, peer comparison and alerts, is free inside the app.
Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.