Why Fidelity National Financial (FNF) is Up Friday

NEW YORK (TheStreet) -- Fidelity National Financial (FNF) benefited from a boost in the market on Friday after Janney Capital Markets recommended the stock as a "buy" in order to profit from the recuperating housing market.

Fidelity National, which is the largest title insurer in the United States, soared 38% last year and climbed approximately 1.4% to $32.70 just before 11 a.m. Eastern on Friday.

Fidelity turned its eye toward the U.S. housing market on Thursday when it purchased Lender Processing Services (LPS) for more than $3 billion in order to increase its presence in mortgage servicing.

TheStreet Ratings team rates FIDELITY NATIONAL FINANCIAL as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate FIDELITY NATIONAL FINANCIAL (FNF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 13.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, FNF's share price has jumped by 37.65%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FNF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite currently having a low debt-to-equity ratio of 0.30, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • FIDELITY NATIONAL FINANCIAL has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FIDELITY NATIONAL FINANCIAL increased its bottom line by earning $2.63 versus $1.26 in the prior year. For the next year, the market is expecting a contraction of 27.4% in earnings ($1.91 versus $2.63).

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