Fidelity National Financial - Value

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Fidelity National Financial Inc. 's ( FNF ) second quarter 2012 earnings surpassed the Zacks Consensus Estimate by 12.8%. This represents the third-straight quarter with a positive earnings surprise for this title insurance underwriter. With a price-to-book (P/B) ratio of just 1, this Zacks #1 Rank (Strong Buy) is a true value pick.

Strong Second Quarter Performance

On July 23, Fidelity National Financial delivered second quarter 2012 earnings of 53 cents per share, up 47.2% from the year-ago quarter. It was also 12.8% higher than the Zacks Consensus Estimate of 47 cents.

Total revenue increased 41.5% year over year to $1.7 billion. The improvement came on the back of higher title revenue (up 16% year over year) and contributions from the newly consolidated restaurant group.

Total expenses climbed 34.6% over the prior-year quarter, primarily due to increased personnel costs, operating expenses and other acquisition costs.

On July 30, the company's board approved a share buyback program, wherein the company can repurchase 15 million shares over three years.

On June 25, Fidelity National Financial announced the acquisition of J. Alexander's Corporation ( JAX ). Subsequently, it will be integrated with American Blue Ribbon Holdings, Inc., the restaurant operating subsidiary of Fidelity National. The purchase consideration is valued at $78 million.

Positive Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for 2012 rose 19.1% to $1.81 as all four estimates were revised upward. This also represents a year-over-year increase of 8.9%.

For 2013, three of four estimates moved upward in the same time frame, eventually lifting the Zacks Consensus Estimate by 7.5% to $1.44.

Attractive Valuation

Along with a P/B of 1.0, Fidelity National has a price-to-earnings (P/E) ratio of 10.2. (A P/B ratio under 3.0 and P/E ratio below 15.0 indicate value.)

Moreover, the company has 1-year return on equity (ROE) of 11.5%, higher than its peer group average of 7.1%.

Headquartered in Jacksonville, Florida, Fidelity National Financial offers title insurance, mortgage services and restaurant and other diversified services in the United States.

With a market capitalization of $4.08 billion and 18,000 employees, it competes with First American Financial Corporation ( FAF ), Old Republic International Corp. ( ORI ) and Stewart Information Services Corporation ( STC ), among others.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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