First American Financial Corporation (NYSE: FAF) Volatility Spurs A Quest For Clarity


The Vanguard Group, Inc. recently announced the acquisition of new stake in First American Financial Corporation (NYSE:FAF). The institutional investor has increased its shareholding in the Financial company by 3.14% to 11.72 million shares with purchase of 0.36 million shares. This fresh investment now brings its stake to 10.52% valued currently at $591.98 million. In addition, Fidelity Management & Research Co. raised its holdings by 0.92 million to 6.0 million shares. And SSgA Funds Management, Inc. has lifted its position by 0.78% or 24317.0 shares – to 3.15 million shares.

With over 0.6 million First American Financial Corporation (FAF) shares trading Friday and a closing price of $47.77 on the day, the dollar volume was approximately $28.61 million. The shares have shown a positive weekly performance of 1.70% and its price on 07/10/20 gained nearly 3.09%. Currently, there are 113.56M common shares owned by the public and among those 107.95M shares have been available to trade.

An analysis of what Wall Street brokers have to say about the expected price targets for this stock gives us this picture: 7 analysts who have offered their price forecasts for FAF have a consensus price objective of $55.00. The analysts have set the share’s price value over the next 12 months at a high of $60.00 and a low of $48.00 should the stock experience a downside. Incidentally, analysts’ outlook for the First American Financial Corporation stock is 2.10 for the next 12 months. The average price target is 12.35% above its last price level and an upside to the estimated low will see the stock gain 0.48% over that period. But an upside of 20.38% will see the stock hit the forecast high price target while mean target price for the stock is $56.50.

Insiders at the company have transacted a total of 30 times over the past 12 months, according to data filed with the U.S. Securities and Exchange Commission (SEC). 14 of these insider trades were purchases, accounting for 245,426 shares. Insider sales of the common stock occurred on 16 occasions, with total insider shares sold totaling 172,476 shares.

The top 3 mutual fund holders in First American Financial Corporation are Vanguard Total Stock Market Index, iShares Core S&P Mid Cap ETF, and Vanguard Small Cap Index Fund. Vanguard Total Stock Market Index owns 3.08 million shares of the company’s stock, all valued at over $155.37 million. The company sold 28125.0 shares recently to bring their total holdings to about 2.76% of the shares outstanding. iShares Core S&P Mid Cap ETF bought 6370.0 shares to see its total holdings expand to 3.06 million shares valued at over $154.39 million and representing 2.74% of the shares outstanding. Vanguard Small Cap Index Fund sold 23652.0 shares to bring its total holdings to over 2.76 million shares at a value of $139.52 million. Vanguard Small Cap Index Fund now owns shares totaling to 2.48% of the shares outstanding.

Shares of First American Financial Corporation (NYSE: FAF) opened at $46.73, up $0.39 from a prior closing price of $46.34. However, the script later closed the day at $47.77, up 3.09%. The company’s stock has a 5-day price change of 1.70% and 1.27% over the past three months. FAF shares are trading -18.09% year to date (YTD), with the 12-month market performance down to -11.44% lower. It has a 12-month low price of $29.36 and touched a high of $66.78 over the same period. Currently, 0.6 million shares have been traded, compared to an average intraday trading volume of 982.80K shares. The stock is trading above its simple moving averages at the SMA20, SMA50, and SMA200, as the current price level is off by -1.96%, -1.92%, and -13.19% respectively.

Institutional ownership of First American Financial Corporation (NYSE: FAF) shares accounts for 86.60% of the company’s 113.56M shares outstanding. Mutual fund holders own 4.96%, while other institutional holders and individual stakeholders account for 50.75% and 35.80% respectively.

It has a market capitalization of $5.34B and a beta (3y monthly) value of 1.07. The stock’s trailing 12-month PE ratio is 8.22, while the earnings-per-share (ttm) stands at $5.81. The company has a PEG of 3.05 and the debt-to-equity ratio at 0.30. Price movements for the stock have been influenced by the stock’s volatility, which stands at 3.13% over the week and 3.27% over the month.

Analysts forecast that First American Financial Corporation (FAF) will achieve an EPS of $0.65 for the current quarter, $0.7 for the next quarter and $4.01 for 2021. The lowest estimate earnings-per-share for the quarter is $0.28 while analysts give the company a high EPS estimate of $0.86. Comparatively, EPS for the current quarter was $1.58 a year ago. Earnings per share for the fiscal year are expected to increase by 48.60%, and 22.05% over the next financial year. EPS should shrink at an annualized rate of 2.70% over the next five years, compared to 23.80% over the past 5-year period.

If you are looking to buy this stock, then you may note that the average analyst recommendation by 7 brokerage firm advisors rate First American Financial Corporation (FAF) as a “Moderate Buy” at a consensus score of 2.10. Specifically, 5 Wall Street analysts polled rate the stock as a buy, while 2 of the 7 advise that investors “hold,” and 0 rated it as a “Sell.”

Looking at the support for the FAF, a number of firms have released research notes about the stock. Stephens stated their Equal-Weight rating for the stock in a research note on April 20, 2020, with the firm’s price target at $76-$48. Keefe Bruyette coverage for the First American Financial Corporation (FAF) stock in a research note released on April 08, 2020 offered a Outperform rating with a price target of $57. Compass Point was of a view on March 05, 2020 that the stock is Buy, while Keefe Bruyette gave the stock Mkt Perform rating on December 09, 2019, issuing a price target of. Susquehanna on their part issued Positive rating on June 19, 2019.


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