Rating Change #5
First American Financial Corp (FAF) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 304.1% when compared to the same quarter one year prior, rising from -$15.34 million to $31.29 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.1%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FAF's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Net operating cash flow has significantly increased by 85.31% to -$7.29 million when compared to the same quarter last year. In addition, FIRST AMERICAN FINANCIAL CP has also vastly surpassed the industry average cash flow growth rate of 32.78%.
First American Financial Corporation, through its subsidiaries, provides financial services in the United States and internationally. The company operates in two segments, Title Insurance and Services, and Specialty Insurance. The company has a P/E ratio of 13.2, below the average insurance industry P/E ratio of 13.4 and below the S&P 500 P/E ratio of 17.7. First American Financial has a market cap of $1.65 billion and is part of the financial sector and insurance industry. Shares are up 22.3% year to date as of the close of trading on Tuesday.You can view the full First American Financial Ratings Report or get investment ideas from our investment research center.
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