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Fidelity National Near 52-Week High: How Should You Play the Stock?
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Shares of Fidelity National Financial (FNF - Free Report) closed at $60.52 on Wednesday, near its 52-week high of $62.00. Market share growth, solid margin, competitive advantages, strong track record of technology innovation and wealth distribution are driving this title insurer.
Shares of FNF have gained 23.2% in the past three months, outperforming the industry’s growth of 11.7%, the Finance sector’s increase of 2.1% and the Zacks S&P 500 composite’s increase of 4%.
FNF shares are trading well above the 50-day moving average, indicating a bullish trend.
FNF Stock vs Industry, Sector, S&P 500 in 3 Months
Image Source: Zacks Investment Research
Average Target Price for FNF Suggests an Upside
Based on short-term price targets offered by six analysts, the Zacks average price target is at $61.17 per share. The average suggests a potential 1.1% upside from Wednesday’s closing price of $65.01.
Mixed Analyst Sentiments
Two of the three analysts covering the stock have lowered estimates for 2024 while all three have increased the same for 2025 over the past 60 days. The consensus estimate for 2024 has moved 1.1% south for 2024 and 2.3% north for 2025 in the past 60 days.
The Zacks Consensus Estimate for 2024 implies a 27.6% year-over-year increase, while the same for 2025 suggests a 26.1% increase.
Factors Favoring FNF Stock
Fidelity National has a market-leading position in residential purchase, refinance and commercial markets, and it thus enjoys scale advantage. Its scale and volume fuel revenues and lower costs provide a competitive advantage. Real estate-related businesses complement its core title business. The title insurer’s strategic move to buy F&G Annuities & Life, a leading provider of annuity and life insurance concentrated in the middle-income market with a diversified growth strategy, shields it from the volatility integral to the core title insurance business.
Solid retail annuity sales and F&G's presence in institutional markets benefit assets under management. F&G invests in a high-quality and well-diversified portfolio and its average assets under management growth drives earnings.
Fidelity National is investing in technology to widen its market-leading position.
Banking on operational expertise, FNF has a solid capital position that supports wealth distribution, mergers and acquisitions, organic growth initiatives and debt payments.
FNF’s Dividend History Impressive
FNF’s distribution of wealth to shareholders via dividend hikes is impressive. Fidelity National has increased dividends at a 10-year CAGR of 9.7%. The dividend yield is 3.3%, better than the industry average of 0.3%.
FNF’s dividend yield betters other industry players like Stewart Information Services (STC - Free Report) and Old Republic International (ORI - Free Report) .
Fidelity National’s Return on Capital
FNF’s return on equity in the trailing 12 months was 14.5%, better than the industry average of 8%, reflecting efficiency in utilizing shareholders’ funds.
However, return on invested capital (ROIC), which reflects a company’s efficiency in utilizing funds to generate income compares unfavorably with the industry. FNF’s ROIC in the trailing 12 months was 5.9%, lower than the industry average of 6.1%.
Risks to FNF
In its recently concluded FOMC meeting, the Federal Reserve cut the interest rate by 50 basis points. FNF stated that every 25-basis point decrease in Fed funds is expected to result in an approximate $15 million annualized decline in its interest and investment income.
Notes payable increased 7.4% as of June 30, 2024. Its leverage of 52.3 deteriorated 182 basis points. Leverage in the trailing 12-month period compared unfavorably with the industry average of 1.4. Times interest earned too compared unfavorably with the industry average.
FNF Shares Are Overvalued
FNF shares are trading at a price-to-book multiple of 2.07, higher than the industry average of 1.61. Yet it has a Value Score of A.
To Conclude
FNF is set to grow on its market-leading position, higher direct premiums, agency premiums, strong origination demand and effective capital deployment. Being the nation’s largest title insurance company, Fidelity National should benefit from solid long-term fundamentals for U.S. residential and commercial real estate markets, given its largest & deepest real estate data networks.
Impressive dividend history and a VGM Score of B are other positives favoring the stock.
Yet, premium valuation, unfavorable leverage and times interest earned and interest rate cut weighing on interest and investment income keep us cautious.
Image: Bigstock
Fidelity National Near 52-Week High: How Should You Play the Stock?
Shares of Fidelity National Financial (FNF - Free Report) closed at $60.52 on Wednesday, near its 52-week high of $62.00. Market share growth, solid margin, competitive advantages, strong track record of technology innovation and wealth distribution are driving this title insurer.
Shares of FNF have gained 23.2% in the past three months, outperforming the industry’s growth of 11.7%, the Finance sector’s increase of 2.1% and the Zacks S&P 500 composite’s increase of 4%.
FNF shares are trading well above the 50-day moving average, indicating a bullish trend.
FNF Stock vs Industry, Sector, S&P 500 in 3 Months
Image Source: Zacks Investment Research
Average Target Price for FNF Suggests an Upside
Based on short-term price targets offered by six analysts, the Zacks average price target is at $61.17 per share. The average suggests a potential 1.1% upside from Wednesday’s closing price of $65.01.
Mixed Analyst Sentiments
Two of the three analysts covering the stock have lowered estimates for 2024 while all three have increased the same for 2025 over the past 60 days. The consensus estimate for 2024 has moved 1.1% south for 2024 and 2.3% north for 2025 in the past 60 days.
The Zacks Consensus Estimate for 2024 implies a 27.6% year-over-year increase, while the same for 2025 suggests a 26.1% increase.
Factors Favoring FNF Stock
Fidelity National has a market-leading position in residential purchase, refinance and commercial markets, and it thus enjoys scale advantage. Its scale and volume fuel revenues and lower costs provide a competitive advantage. Real estate-related businesses complement its core title business. The title insurer’s strategic move to buy F&G Annuities & Life, a leading provider of annuity and life insurance concentrated in the middle-income market with a diversified growth strategy, shields it from the volatility integral to the core title insurance business.
Solid retail annuity sales and F&G's presence in institutional markets benefit assets under management. F&G invests in a high-quality and well-diversified portfolio and its average assets under management growth drives earnings.
Fidelity National is investing in technology to widen its market-leading position.
Banking on operational expertise, FNF has a solid capital position that supports wealth distribution, mergers and acquisitions, organic growth initiatives and debt payments.
FNF’s Dividend History Impressive
FNF’s distribution of wealth to shareholders via dividend hikes is impressive. Fidelity National has increased dividends at a 10-year CAGR of 9.7%. The dividend yield is 3.3%, better than the industry average of 0.3%.
FNF’s dividend yield betters other industry players like Stewart Information Services (STC - Free Report) and Old Republic International (ORI - Free Report) .
Fidelity National’s Return on Capital
FNF’s return on equity in the trailing 12 months was 14.5%, better than the industry average of 8%, reflecting efficiency in utilizing shareholders’ funds.
However, return on invested capital (ROIC), which reflects a company’s efficiency in utilizing funds to generate income compares unfavorably with the industry. FNF’s ROIC in the trailing 12 months was 5.9%, lower than the industry average of 6.1%.
Risks to FNF
In its recently concluded FOMC meeting, the Federal Reserve cut the interest rate by 50 basis points. FNF stated that every 25-basis point decrease in Fed funds is expected to result in an approximate $15 million annualized decline in its interest and investment income.
Notes payable increased 7.4% as of June 30, 2024. Its leverage of 52.3 deteriorated 182 basis points. Leverage in the trailing 12-month period compared unfavorably with the industry average of 1.4. Times interest earned too compared unfavorably with the industry average.
FNF Shares Are Overvalued
FNF shares are trading at a price-to-book multiple of 2.07, higher than the industry average of 1.61. Yet it has a Value Score of A.
To Conclude
FNF is set to grow on its market-leading position, higher direct premiums, agency premiums, strong origination demand and effective capital deployment. Being the nation’s largest title insurance company, Fidelity National should benefit from solid long-term fundamentals for U.S. residential and commercial real estate markets, given its largest & deepest real estate data networks.
Impressive dividend history and a VGM Score of B are other positives favoring the stock.
Yet, premium valuation, unfavorable leverage and times interest earned and interest rate cut weighing on interest and investment income keep us cautious.
It is thus wise to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.