Financial Survey: First American (NYSE:FAF) & Its Competitors

First American (NYSE: FAF) is one of 86 public companies in the “Property & Casualty Insurance” industry, but how does it contrast to its peers? We will compare First American to related businesses based on the strength of its risk, earnings, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Valuation & Earnings

This table compares First American and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
First American $5.58 billion $342.99 million 21.86
First American Competitors $11.51 billion $1.16 billion 154.74

First American’s peers have higher revenue and earnings than First American. First American is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

First American has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, First American’s peers have a beta of 0.89, suggesting that their average share price is 11% less volatile than the S&P 500.

Dividends

First American pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. First American pays out 60.1% of its earnings in the form of a dividend. As a group, “Property & Casualty Insurance” companies pay a dividend yield of 1.3% and pay out 14.7% of their earnings in the form of a dividend. First American has increased its dividend for 5 consecutive years.

Institutional & Insider Ownership

83.4% of First American shares are owned by institutional investors. Comparatively, 60.2% of shares of all “Property & Casualty Insurance” companies are owned by institutional investors. 3.1% of First American shares are owned by insiders. Comparatively, 15.6% of shares of all “Property & Casualty Insurance” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for First American and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First American 0 1 1 0 2.50
First American Competitors 636 2334 2209 48 2.32

First American presently has a consensus target price of $49.50, suggesting a potential downside of 10.49%. As a group, “Property & Casualty Insurance” companies have a potential upside of 0.35%. Given First American’s peers higher probable upside, analysts plainly believe First American has less favorable growth aspects than its peers.

Profitability

This table compares First American and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First American 4.88% 14.30% 4.95%
First American Competitors 6.42% 1.76% 1.30%

Summary

First American peers beat First American on 9 of the 15 factors compared.

First American Company Profile

First American Financial Corporation, through its subsidiaries, is engaged in the business of providing financial services. The Company operates through the title insurance and services segment, and specialty insurance segment. The title insurance and services segment provides title insurance, closing and/or escrow services and similar or related services domestically and internationally in connection with residential and commercial real estate transactions. The title insurance and services segment also provides products, services and solutions involving the use of property related data, including data derived from its database, which are designed to manage risk or otherwise facilitate real estate transactions. The specialty insurance segment issues property and casualty insurance policies and sells home warranty products to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism and other types of property damage.

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