Should Value Investors Buy First American Financial (FAF) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is First American Financial (FAF). FAF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 12.12 right now. For comparison, its industry sports an average P/E of 27.67. Over the last 12 months, FAF's Forward P/E has been as high as 13.14 and as low as 6.85, with a median of 10.61.
Another notable valuation metric for FAF is its P/B ratio of 1.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.40. Over the past 12 months, FAF's P/B has been as high as 1.41 and as low as 0.95, with a median of 1.22.
Value investors will likely look at more than just these metrics, but the above data helps show that First American Financial is likely undervalued currently. And when considering the strength of its earnings outlook, FAF sticks out at as one of the market's strongest value stocks.
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First American Financial Corporation (FAF) : Free Stock Analysis Report
