We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
First American Financial (FAF) Q4 Earnings Top, Revenues Miss
Read MoreHide Full Article
First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2018 operating income per share of $1.27, which outperformed the Zacks Consensus Estimate by 11.4%. Moreover, the bottom line improved 33.7%.
Growth in commercial business and rising investment income largely offset the decline in refinance transactions.
Behind the Headlines
Operating revenues of $1.4 billion declined 4.3% year over year and missed the Zacks Consensus Estimate by 3.5%
Net investment income grew 40% to $63.3 million,
Closed title orders declined 1%, attributable to 42% decline in refinance orders and a 9% decline in purchase orders.
Average revenue per order increased 17%, driven by the shift in mix to higher-premium purchase and commercial transactions.
Total expense of $1.3 billion decreased 1.8% year over year, attributable to decrease in premiums retained by agents and other operating expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
Operating income per share of $4.58 outpaced the Zacks Consensus Estimate of $4.39. Moreover, the bottom line surged 24.5%.
Revenues of $5.7 billion declined 0.4% over 2017.
Segment Results
Title Insurance and Services: Total revenues decreased 3% year over year to $1.3 billion.
Pretax margin contracted 180 bps.
Direct open orders declined 12.6% to $202.4 million while Direct closed orders declined 13.6% year over year.
The company expects strong performance in commercial business and growth in investment income. However, continued pressure in residential business is likely to persist.
Specialty Insurance: Total revenues decreased 8% year over year to $111.6 million.
Pretax margin was 0.7%, much lower than 9.2% in the year-ago quarter.
Financial Update
First American exited 2018 with cash and cash equivalents of $1.5 billion, up 5.8% year over year. Notes and contracts payable was $732 million, down 0.1% year over year.
First American exited 2018 with stockholders’ equity of $3.7 billion, up 7.5% year over year.
Return on equity was 13.1% in 2018.
Cash flow from operations was $793.2 million, up 25% from 2017.
Capital Deployment
The company bought back $20.9 million including $2.1 million so far in the first quarter of 2019.
Among other companies in the insurance industry, which have already reported fourth-quarter earnings, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate while The Progressive Corporation’s (PGR - Free Report) missed the same.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
Image: Bigstock
First American Financial (FAF) Q4 Earnings Top, Revenues Miss
First American Financial Corporation (FAF - Free Report) reported fourth-quarter 2018 operating income per share of $1.27, which outperformed the Zacks Consensus Estimate by 11.4%. Moreover, the bottom line improved 33.7%.
Growth in commercial business and rising investment income largely offset the decline in refinance transactions.
Behind the Headlines
Operating revenues of $1.4 billion declined 4.3% year over year and missed the Zacks Consensus Estimate by 3.5%
Net investment income grew 40% to $63.3 million,
Closed title orders declined 1%, attributable to 42% decline in refinance orders and a 9% decline in purchase orders.
Average revenue per order increased 17%, driven by the shift in mix to higher-premium purchase and commercial transactions.
Total expense of $1.3 billion decreased 1.8% year over year, attributable to decrease in premiums retained by agents and other operating expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
First American Financial Corporation Price, Consensus and EPS Surprise | First American Financial Corporation Quote
Full-Year Highlights
Operating income per share of $4.58 outpaced the Zacks Consensus Estimate of $4.39. Moreover, the bottom line surged 24.5%.
Revenues of $5.7 billion declined 0.4% over 2017.
Segment Results
Title Insurance and Services: Total revenues decreased 3% year over year to $1.3 billion.
Pretax margin contracted 180 bps.
Direct open orders declined 12.6% to $202.4 million while Direct closed orders declined 13.6% year over year.
The company expects strong performance in commercial business and growth in investment income. However, continued pressure in residential business is likely to persist.
Specialty Insurance: Total revenues decreased 8% year over year to $111.6 million.
Pretax margin was 0.7%, much lower than 9.2% in the year-ago quarter.
Financial Update
First American exited 2018 with cash and cash equivalents of $1.5 billion, up 5.8% year over year. Notes and contracts payable was $732 million, down 0.1% year over year.
First American exited 2018 with stockholders’ equity of $3.7 billion, up 7.5% year over year.
Return on equity was 13.1% in 2018.
Cash flow from operations was $793.2 million, up 25% from 2017.
Capital Deployment
The company bought back $20.9 million including $2.1 million so far in the first quarter of 2019.
Zacks Rank
First American currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other companies in the insurance industry, which have already reported fourth-quarter earnings, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate while The Progressive Corporation’s (PGR - Free Report) missed the same.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>