Is First American Financial (FAF) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
First American Financial (FAF) is a stock many investors are watching right now. FAF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 11.70 right now. For comparison, its industry sports an average P/E of 24.91. FAF's Forward P/E has been as high as 12.27 and as low as 9.21, with a median of 11.08, all within the past year.
FAF is also sporting a PEG ratio of 1.06. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FAF's industry has an average PEG of 3.01 right now. Within the past year, FAF's PEG has been as high as 1.12 and as low as 0.71, with a median of 1.01.
Finally, investors will want to recognize that FAF has a P/CF ratio of 9.54. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.61. Over the past 52 weeks, FAF's P/CF has been as high as 9.89 and as low as 6.39, with a median of 9.08.
These are only a few of the key metrics included in First American Financial's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FAF looks like an impressive value stock at the moment.
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