Fidelity National (FNF) Rises 20% in 6 Months: More Room to Grow?
Fidelity National Financial’s FNF shares have gained 19.9% in the past six months, outperforming the industry’s increase of 16.1%. The Finance sector and the Zacks S&P 500 composite have risen 7.2% and 9.7%, respectively, in the said time frame.
Higher direct premiums, agency premiums, strong origination demand and effective capital deployment should continue to drive this Zacks Rank #2 (Buy) company.
Fidelity National, with a market capitalization of $11.1 billion, has a decent history of delivering positive surprises. It beat estimates in three of the last four reported quarters, while missing in one. Earnings of this insurer, having a market capitalization of $11.1 billion, increased 16.5% in the last five years.
FNF’s return on equity in the trailing 12 months was 15.9%, better than the industry average of 6.7%, reflecting efficiency in utilizing shareholders’ funds.
Can the Stock Retain the Momentum?
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 2.7% and 2.4% north in the past 30 days, reflecting analysts’ optimism.
FNF’s market-leading position in residential purchase, refinance and commercial markets provides a scale advantage, supported by one of the largest and deepest real estate data networks. The title insurer’s core title business is complemented by ancillary real estate-related businesses.
Its scale and volume fuel revenues, lower costs and provide a competitive advantage. Premiums should benefit from higher direct premiums, agency premiums, and escrow, title-related and other fees.
Expanded distribution channels and attractive spreads are expected to have aided sales at F&G Annuities & Life. Assets under management are expected to have benefited from solid retail annuity sales and F&G's interest in institutional markets. F&G invests in a high-quality and well-diversified portfolio and its average assets under management growth drives earnings
In tandem with the industry, Fidelity National continues to make investments in technology to widen its market-leading position.
FNF ensures a balanced capital allocation by making strategic investments in title technology and other strategic initiatives to support innovation and organic growth in the business.
The acquisition of F&G Annuities & Life, a leading provider of annuity and life insurance concentrated in the middle-income market, provides Fidelity National with a diversified growth strategy and shields it from the volatility integral to the core title insurance business.
The title insurer has a solid balance sheet, which enables dividend payouts, share buybacks, mergers and acquisitions, organic growth initiatives and debt payments. Fidelity National has increased dividends each year at a 10-year CAGR of 12.4%. The dividend yield is 4.4%, better than the industry average of 0.3%.
Fidelity National is poised for progress, which is evident from its favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum
Attractive Valuation
The company’s shares are trading at a forward price-to-earnings multiple of 8.6, lower than the industry average of 27.5. Before valuation expands, it is wise to take a position in the stock.
It has a Value Score of A. This style score helps find the most attractive value stocks.
Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, Chubb Limited CB and Cincinnati Financial Corporation CINF. While Axis Capital sports a Zacks Rank #1, Chubb and Cincinnati Financial carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. Year to date, AXS has gained 6.1%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Chubb has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 3.36%. CB has lost 3.9% so far this year.
The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, indicating a year-over-year increase of 19.2% and 9.2%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 2.7%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
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Chubb Limited (CB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
