First American Corporation (New) (FAF) Company Bio
First American Financial is a provider of title insurance, settlement services and risk solutions for real estate transactions. The company provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. The company was founded in 2008 and is based in Santa Ana, California.
FAF Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for First American Financial Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that First American Financial Corp ranked in the 76th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 347.17% on a DCF basis. The most interesting components of our discounted cash flow analysis for First American Financial Corp ended up being:
In the past 5.82 years, First American Financial Corp has a compound free cash flow growth rate of 0.23%; that's better than 76.51% of cash flow producing equities in the Financial Services sector, where it is classified.
FAF's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 27.9% of tickers in our DCF set.
First American Financial Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 19.88. This coverage rate is greater than that of 85% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Financial Services that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as FAF, try OPY, ATAX, TREE, BAM, and MCY.