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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#2602
Positioning
Market Dominance
Finance, Insurance, And Real Estate
Insurance
$6.5B
Kenneth D. DeGiorgio
Title Insurance and Services segment issues title insurance policies on residential and commercial property. Specialty Insurance segment provides property and casualty insurance for homeowners and renters. This segment offers its products through a network of direct operations and agents in 49 states.
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = FAF ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$SII SPROTT INC. | 75 | 91 | 87 | 98 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PUK PRUDENTIAL PLC | 73 | 88 | 97 | 80 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$NMR NOMURA HOLDINGS INC | 72 | 81 | 92 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PSLV Sprott Physical Silver Trust | 69 | 82 | 80 | 98 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$UFCS UNITED FIRE GROUP INC | 68 | 81 | 93 | 76 | 5.0x | 3.5x | 13.2% | 4.1% | 99.9% | 14.7% | 11.1% | 9.2% | 2.1% | 16.0x | $775M | VS | |
$SLF SUN LIFE FINANCIAL INC | 68 | 83 | 95 | 63 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$CBOE Cboe Global Markets, Inc. | 68 | 75 | 63 | 77 | 21.3x | 15.7x | 24.0% | 13.7% | 41.7% | 32.4% | 26.4% | 8.2% | 1.1% | 30.0x | $25.7B | VS | |
$VTMX Vesta Real Estate Corporation, S.A.B. de C.V. | 67 | 69 | 77 | 80 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PHYS Sprott Physical Gold Trust | 67 | 64 | 82 | 91 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$GLDM World Gold Trust | 66 | 54 | 85 | 92 | 11.3x | 11.3x | - | 20.9% | 100.0% | 97.1% | 554.8% | -19.0% | 0.0% | - | $32.0B | VS | |
$FAF First American Financial Corp | 46 | 29 | 58 | 44 | 22.3x | 11.3x | 5.6% | 1.9% | 0.0% | 4.7% | 3.7% | 25.5% | 3.4% | 194.0x | $6.5B | ||
| SECTOR BENCH | - | - | - | - | - | 11.9x | 7.8x | 9.0% | 1.3% | 77.7% | 18.1% | 21.9% | 10.7% | 2.0% | 0.5x | - | REF |
First American Financial Corp (FAF) receives a "Reduce" rating with a composite score of 46.2/100. It ranks #2602 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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In-line with peers — no strong momentum signal
Fair valuation relative to peers
Weak fundamentals — higher risk of value trap
Low volatility — smoother ride and historically better risk-adjusted returns
Moderate investment profile
Mid-range overall rating
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Relative valuation derived from Finance, Insurance, And Real Estate sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for FAF.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 29 | 26 | +3NEUTRAL |
| MOMENTUM | 44 | 43 | +1NEUTRAL |
| VALUATION | 58 | 80 | -22DRAG |
| INVESTMENT | 37 | 69 | -32DRAG |
| STABILITY | 64 | 71 | -7DRAG |
| SHORT INT | 36 | 29 | +7ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 5.6% (sector 9.0%)
GM 0% vs sector 78%, OM 5% vs sector 18%
Capital turnover N/A
Rev growth 25%, 10yr history
Interest coverage 5.3x, Net debt/EBITDA -0.3x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate First American Financial Corp (FAF) as a Reduce with a composite score of 46.2/100 at a current price of $67.09. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential.
First American Financial Corp holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 46.2/100 places it at rank #2602 in our full universe.
No Moat
Medium
Poor
Fair Value
Stable competitive position in a defensive sector.
Leverage of 194% D/E amplifies downside risk.
Below-average quality raises earnings sustainability concerns.
Vulnerability to macroeconomic shocks and interest rate volatility.
First American Financial Corp represents a reduce based on multi-factor quantitative performance.
First American Financial Corp receives a Reduce rating from our analysis, with a composite score of 46.2/100 and 2 out of 5 stars, ranking #2602 out of 7,333 stocks. FAF's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
FAF's quality score of 29/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 5.6% (sector avg: 9.0%), gross margins of 0.0% (sector avg: 77.7%), net margins of 3.7% (sector avg: 21.9%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
FAF's value score of 58/100 indicates the stock is fairly valued based on its current fundamentals. Key valuation metrics include a P/E ratio of 22.26x, an EV/EBITDA of 11.29x, a P/B ratio of 1.24x. At this level, neither a clear bargain nor overpriced, the stock's attractiveness depends more on forward growth expectations and qualitative factors.
First American Financial Corp's investment score of 37/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 25.5% vs. a sector average of 10.7% and a return on assets of 1.9% (sector: 1.3%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
FAF is currently showing below-average momentum at 44/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at 25.5% year-over-year, while a beta of 0.63 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
With a stability score of 64/100, FAF exhibits average financial resilience. Key stability metrics include a beta of 0.63 and a debt-to-equity ratio of 194.00x (sector avg: 0.5x). While the balance sheet is not a major concern, the stock is subject to typical market volatility and may experience sharper drawdowns during risk-off episodes.
First American Financial Corp's short interest score of 36/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include elevated leverage (D/E: 194.00x). At $6.5B (mid-cap), FAF carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
FAF pays a solid dividend yield of 3.4%, contributing an income component to total returns. This compares to a sector average dividend yield of 2.0%. This moderate yield suggests a balance between returning capital to shareholders and retaining earnings for reinvestment — a common profile among quality compounders.
First American Financial Corp is a mid-cap company in the Finance, Insurance, And Real Estate sector, ranked #0 of 50 in its sector (100th percentile) and #2602 of 7,333 overall (65th percentile). Key comparisons include ROE of 5.6% trailing the 9.0% sector median and operating margins of 4.7% below the 18.1% sector average. This top-quartile standing reflects exceptional competitive strength relative to Finance, Insurance, And Real Estate peers.
While FAF currently exhibits a REDUCE profile, superior opportunities exist within the FINANCE, INSURANCE, AND REAL ESTATE sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Quality (29) would have the largest impact on the composite score.
EV/EBITDA 45% ABOVE SECTOR MEDIAN
ROE 38% BELOW SECTOR MEDIAN
Gross Margin 100% BELOW SECTOR MEDIAN
Above 50MA
37.18%
Net New Highs
+51081
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