FAF Stock Trading at a Discount to Industry at 1.08X: Time to Buy?
Summarize this article with:
April 06, 2026 — 10:33 am EDT Written by Zacks Equity Research for Zacks-> First American Financial Corporation FAF shares are trading at a discount to the Zacks Property and Casualty Insurance industry. Its forward price-to-book value of 1.08X is lower than the industry average of 1.4X, the Finance sector’s 4.06X and the Zacks S&P 500 Composite’s 7.71X. The insurer has a Value Score of A.Shares of RenaissanceRe Holdings Ltd. RNR, NMI Holdings Inc. NMIH and Axis Capital Holdings Limited AXS are also trading at a discount to the industry average.Image Source: Zacks Investment ResearchThe insurer has a market capitalization of $5.95 billion. The average volume of shares traded in the last three months was 1.1 million.Shares of this insurer have lost 5.3% year to date compared with the industry’s decline of 4.6%.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for First American’s 2026 earnings per share indicates a year-over-year increase of 5.4%. The consensus estimate for revenues is pegged at $8.04 billion, implying a year-over-year improvement of 7.8%. The consensus estimate for 2027 earnings per share and revenues indicates an increase of 7.8% and 5%, respectively, from the corresponding 2026 estimates. The expected long-term earnings growth rate is 15.2%, outperforming the industry average of 7.7%. FAF has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.First American surpassed earnings estimates in each of the last four quarters, the average being 22.9%.One of the three analysts covering the stock has raised estimates for 2026, and two of the three analysts have raised the same for 2027 over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 0.4% and 0.5%, respectively, in the past 30 days.Based on short-term price targets offered by five analysts, the Zacks average price target is $81.60 per share. The average suggests a potential 40.1% upside from the last closing price.Image Source: Zacks Investment ResearchFirst American’s return on equity of 11.9% for the trailing 12 months compared favorably with the industry’s 7.3%, reflecting the company’s efficiency in utilizing shareholders’ funds.First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology positions FAF well for long-term growth. FAF is witnessing early stabilization in the purchase market and thus expects housing demand, improving economy and labor markets to continue to drive home price appreciation.Growing direct premiums, escrow fees and title agent premiums should continue to drive the top line. The title insurer stays focused on strengthening its product offerings, enhancing its core business and expanding valuation and data businesses. Also, the expansion of title plant assets and the upgrade of technology solutions drive increased efficiency.First American distributes wealth to shareholders via dividend hikes and share buybacks. Its dividend yield as well as payout ratio is better than the industry average, making it an attractive pick for yield-seeking investors.Increased demand among millennials for first-time home purchases, improved rate environment and strength in commercial business should favor FAF’s results. The solid dividend yield is another positive. FAF also has a VGM Score of A. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. Coupled with the impressive dividend history, solid growth projections and higher return on equity, as well as the affordability of shares, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Quantum Computing is the next technological revolution, and it could be even more advanced than AI. While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power. Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.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 reportRenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis ReportAxis Capital Holdings Limited (AXS) : Free Stock Analysis ReportFirst American Financial Corporation (FAF) : Free Stock Analysis ReportNMI Holdings Inc (NMIH) : Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchThe views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.This data feed is not available at this time.