Fact based stock research
First American Financial (NYSE:FAF)

US31847R1023

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

First American Financial stock research in summary

firstam.com

ANALYSIS: With an Obermatt Combined Rank of 40 (worse than 60% compared with investment alternatives), First American Financial (Property & Casualty Insurance, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of First American Financial are a good value (attractively priced) with a consolidated Value Rank of 95 (better than 95% of alternatives) but show below-average growth (Growth Rank of 45), and are riskily financed (Safety Rank of 34), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 40, is a hold recommendation based on First American Financial's financial characteristics. As the company First American Financial's key financial metrics exhibit good value (Obermatt Value Rank of 95) but low growth (Obermatt Growth Rank of 45) and risky financing practices (Obermatt Safety Rank of 34), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 95% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	95
Growth Rank	45
Safety Rank	34
Combined Rank	40

Country	USA
Industry	Property & Casualty Insurance
Index	Dividends USA, Employee Focus US, D.J. US Insurance, S&P MIDCAP
Size class	X-Large

This stock has achievements: Top 10 Stock.

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: First American Financial

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	60	65	56	95
GROWTH
GROWTH	85	55	49	45
SAFETY
SAFETY	53	34	34	34
SENTIMENT
SENTIMENT	n/a	57	40	^new
360° VIEW
360° VIEW	n/a	71	49	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better First American Financial is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	60	65	56	95
GROWTH
GROWTH	85	55	49	45
SAFETY
SAFETY	53	34	34	34
COMBINED
COMBINED	75	40	40	40

Last update of combined financial performance: 6-Oct-2022. Stock analysis on combined financial performance: The higher the rank of First American Financial the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 95 (better than 95% compared with alternatives) for 2022, First American Financial shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for First American Financial. Price-to-Sales is 67 which means that the stock price compared with what market professionals expect for future sales is lower than for 67% of comparable companies, indicating a good value for First American Financial's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 62% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 74. Compared with other companies in the same industry, dividend yields of First American Financial are expected to be higher than for 93% of all competitors (a Dividend Yield rank of 93). ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 95, is a buy recommendation based on First American Financial's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in First American Financial based on its detailed value metrics. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	49	60	53	67
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	81	52	43	62
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	27	41	53	74
DIVIDEND YIELD
DIVIDEND YIELD	70	81	80	93
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	60	65	56	95

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of First American Financial; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), First American Financial shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for First American Financial. While Sales Growth ranks at 98, professionals currently expect the company to grow more than 98% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 30, which means that, currently, professionals expect the company to grow its profits less than 70% of its competitors, and Capital Growth has a low rank of 37. Historic stock returns were also below average with a current Stock Returns rank of 19 which means that the stock returns have recently been below 81% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance isn't stellar here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	85	6	37	98
PROFIT GROWTH
PROFIT GROWTH	50	67	13	30
CAPITAL GROWTH
CAPITAL GROWTH	n/a	43	53	37
STOCK RETURNS
STOCK RETURNS	67	95	81	19
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	85	55	49	45

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of First American Financial.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 34 (better than 34% compared with alternatives), the company First American Financial has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of First American Financial is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for First American Financial. Liquidity is at 25, meaning that the company generates less profit to service its debt than 75% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 48, meaning the company has an above-average debt-to-equity ratio. It has more debt than 52% of its competitors. Finally, Refinancing is at a rank of 2 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 98% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 34 (worse than 66% compared with alternatives), First American Financial has a financing structure that is riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. Investors should look at Obermatt’s Value, Growth, and Sentiment Ranks to confirm a very positive outlook or be careful with investing in stocks of First American Financial because it may suffer significantly in case of future difficulties. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	63	34	41	48
REFINANCING
REFINANCING	13	2	2	2
LIQUIDITY
LIQUIDITY	71	57	47	25
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	53	34	34	34

Last update of Safety Rank: 6-Oct-2022. Stock analysis on safety metrics: The higher the rank, the lower the leverage of First American Financial and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	62	51	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	75	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	73	32	^new
MARKET PULSE
MARKET PULSE	n/a	18	43	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	57	40	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for First American Financial.
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