On Dec 7, Zacks Investment Research upgraded
First American Financial Corp.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
First American has been experiencing rising earnings estimates
on the back of improved core fundamentals in third-quarter 2013.
Moreover, the company's strong underwriting capabilities and
capital position have been impressive.
Additionally, this property-casualty insurer delivered
positive earnings surprises in 3 of the last 4 quarters with an
average beat of 8.7%. First American also outperformed the
6-month S&P 500, which posted an increase of 9.8% against the
modest return of 20.1% clocked by the company.
On Oct 24, First American reported third-quarter operating
earnings of 63 cents per share, which comfortably beat the Zacks
Consensus Estimate by 2 cents but missed the year-ago quarter
number by a penny.
Although higher expenses and unrealized losses marred the
bottom line, the top line surged 7.7% over the prior-year
quarter, driven by higher direct premiums, escrow fees and agent
premiums across segments. Net investment income also improved
within title insurance segment. Meanwhile, increased cash and
assets also boosted the balance sheet position.
First American's growth strategy of enhancing core operating
leverage is showing results. Moreover, the company's consistent
capital deployment activities continue to boost investors'
confidence in the stock.
Based on First American's capital strength and underwriting
discipline, the Zacks Consensus Estimate for 2013 rose 4.3% to
$1.69 per share in the last 60 days. The estimate for 2014 is
pegged at $1.85, up 7.8% in the same period. Meanwhile, no
downward revision in estimates was witnessed for both the
Meanwhile, the Most Accurate Estimate for First American's
2013 earnings stands at $1.74 a share, resulting in an
Other Insurers Worth a Look
Investors interested in the insurance industry may also
consider stocks like
HCI Group Inc.
Endurance Specialty Holdings Ltd.
CNA Financial Corp.
). All these stocks sport the same Zacks Rank as First
CNA FINL CORP (CNA): Free Stock Analysis
ENDURANCE SPLTY (ENH): Free Stock Analysis
FIRST AMER FINL (FAF): Free Stock Analysis
HCI GROUP INC (HCI): Free Stock Analysis
To read this article on Zacks.com click here.