First American (FAF) Q3 Earnings and Revenues Top Estimates

First American Financial Corporation FAF reported third-quarter 2019 operating income per share of $1.64, which outperformed the Zacks Consensus Estimate by 13%. Moreover, the bottom line improved 26% year over year.

The quarter benefited from growth in investment income along with broad-based revenue growth across key markets.

First American Financial Corporation Price, Consensus and EPS Surprise

First American Financial Corporation Price, Consensus and EPS Surprise

First American Financial Corporation price-consensus-eps-surprise-chart | First American Financial Corporation Quote

Behind the Headlines

Operating revenues of $1.7 billion increased 8.4% year over year and beat the Zacks Consensus Estimate by 3.7%, led by higher, direct premiums and escrow fees, agent premiums, information and other and net investment income.

Net investment income increased 12.8% to $76.6 million.

Closed title orders increased 21.4%, driven by 89% increase in refinance orders.

Average revenue per order decreased 6% due to a shift in the mix of direct orders closed to lower-premium refinance transactions.

Segment Results

Title Insurance and Services: Total revenues increased 9.2% year over year to $1.54 billion.

Pretax margin expanded 230 basis points to 16.4%.

Title open orders increased 27.4% to 317,300 million while Title closed orders increased 21.4% year over year to $224,100 million.

Specialty Insurance: Total revenues increased 4.9% year over year to $128.1 million, led by higher contribution from home warranty business.

Pretax margin expanded 440 basis points to 7.8%.

Financial Update

First American exited the quarter with cash and cash equivalents of $1.7 billion, up 16.6% from 2018 end. Notes and contracts payable were $728.3 million, down 0.3% from 2018 end.

First American exited the quarter with stockholders’ equity of $4.2 billion, down 0.5% from 2018 end.

Cash flow from operations was $310.6 million, up 34.5% year over year.

Zacks Rank

First American currently has a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Insurance Releases

Of the insurance industry players that have reported third-quarter results so far, The Progressive Corporation PGR, MGIC Investment Corporation MTG and Globe Life GL beat the respective Zacks Consensus Estimate for earnings.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
First American Financial Corporation (FAF) : Free Stock Analysis Report
 
Globe Life Inc. (GL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research