First American Financial Corporation FAF is poised for long-term growth on the back of increased demand among millennials for first-time home purchases, improved rate environment, and effective capital deployment. The company has an impressive Growth Score of A. This style score analyzes the growth prospects of a company.
The company has seen its 2019 estimates move up 1.3% in the past 60 days, reflecting analyst confidence in the company.
First American Financial’s return on equity was 14.5%, higher than the industry average of 7.2%. Return on equity is a profitability measure that identifies the company’s efficiency in utilizing its shareholders’ funds.
First American Financial remains well poised to capitalize on improving housing demand. Purchase transactions generate more than twice the revenues of refinance transactions. The company thus anticipates housing inventory constraints to continue, driving price appreciation and revenues. It also expects increased demand among millennials for first-time home purchases.
First American Financial’s inorganic growth story remains impressive, strengthen its core business and expand its valuation and data businesses. The company remains committed to making acquisitions that meet its risk-adjusted return target supported by financial flexibility.
First American Financial has been engaging in enhancing its shareholders value. While it increased dividend at a 5-year CAGR of more than 11%, its dividend yield of 3.4% betters the industry yield of 0.5%. With respect to share buybacks, the company still has $163.6 million worth of shares remaining. These make the stock an attractive pick for yield-seeking investors.
The Zacks Rank #3 (Hold) financial service provider sports an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Shares of the company have gained 20.9% year to date, outperforming the industry’s increase of 0.1% and the Zacks S&P 500 composite’s increase of 13.1%.
The Zacks Consensus Estimate for 2019 earnings is pegged at $4.58 per share, indicating 9.3% year-over-year increase on 0.7% revenue growth. The company has a solid track of outperforming earnings expectations in the last 13 quarters, reflecting operational excellence.
Stocks to Consider
Some better-ranked stocks from the property and casualty industry are Cincinnati Financial Corporation CINF, Arch Capital Group Ltd. ACGL, and Berkshire Hathaway Inc. BRK.B.
Cincinnati Financial provides property casualty insurance products in the United States. The company delivered a 22.50% positive surprise in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprise in all the last four reported quarters, with the average being 14.72%.
Berkshire Hathaway provides property and casualty insurance and reinsurance plus life, accident and health reinsurance besides operating railroad systems in North America. The company came up with positive surprise in three of the preceding four reported quarters, the average beat being 4.31%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
First American Financial Corporation (FAF) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
To read this article on Zacks.com click here.