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First American Financial Corporation

FAF Financial Insurance Specialty

First American Financial Corporation’s revenue for fiscal 2025 (year ended December 2025) was $7.5 billion, up 21.6% from fiscal 2024.

Revenue
+5.34%
EPS
−6.52%
Free cash flow
−12.3%
Total debt
+0.08%

Quarter to September 2026, against a year earlier

67.94 0.27 +0.40%
Market cap
$7.0B
P/E
9.5×
Fwd P/E
9.6×
Dividend yield
3.33%
F-score
8/9
Altman Z
n/a
Beneish M
n/a
Dividend safety
n/a
Overview Business Profile Earnings & Analysis
Financials
Income Statement Balance Sheet Cash Flow Metrics & Ratios
Segments Valuation Filings

First American Financial Corporation (FAF) valuation and DCF model

What the price implies · reverse DCF

At $67.94 the price implies 15.4% a year of dividend growth, at a 9.0% cost of equity.

The dividend a share grew 8.1% a year over the last ten years, 4.1% over the last five. The price asks for about twice its ten-year rate. Return on equity averaged 11.8% over ten years; the price implies 10.9% for good.

In December 2017 the price assumed 15.0% a year; First American Financial Corporation went on to grow the dividend a share 5.0% a year to FY2025.

Price implies
15.4%
Last 5 years, reported
4.1%
Last 10 years, reported
8.1%

The headline discounts the last twelve months’ the dividend a share at 9.0% for ten years and grows it 2.5% a year after that, the same for every company, so the figure compares across the market (how a reverse DCF works).

The other way round · DCF
The price needs
15.4% a year for ten years
$67.94
today’s price
Its base case
8.1% a year for five years, then 4.9%
$35.20
48.2% below today’s price

Both are growth in the dividend a share, discounted at 9.0%, with 2.5% a year after year ten.

Base case on its own ten-year record First American Financial Corporation’s own growth, carried forward

Its assumptions

Powerpack lets you start from a scenario and type over any of them.

The base case’s inputs, which Powerpack lets you change
1 · Dividends
the four quarters to September 2026, from the 10-Q and 10-K filings

Yearly growth in the dividend. It usually slows as the company matures.

Today’s price implies the dividend a share growing 15.4% a year for ten years.

2 · Rates

Cost of equity is the yearly return shareholders require, typically 8–11%. Terminal growth is growth forever after year 10, usually near long-run inflation, 2–3%.

3 · Per share

The model is a share’s own: no debt to take off and no shares to divide among.

Advanced inputs

Against First American Financial Corporation’s own cost of capital: risk-free 4.3% + beta 1.25 × equity premium 4.5% = 9.9% cost of equity; weighted, 9.9%.

Use 9.9%
Base case value per share $35.20 ten years discounted, and what follows
Current price $67.94 market price per share
Below today’s price 48.2% downside at the base case’s assumptions

How we got there$14.91 10 years of dividends+$20.29 terminal value=$35.20 per share

Valuation against its own history

Today’s multiple against its 5- and 10-year averages and the industry median (Insurance Specialty).

Multiple Current 5Y avg 10Y avg vs 10Y avg Industry median vs industry 10Y range
P/E 9.54× 24.25× 17.12× 44% below 9.49× 1% above
P/FCF 8.66× 21.81× 15.09× 43% below 8.44× 3% above
P/B 1.29× 1.26× 1.36× 5% below 1.23× 5% above
EV/EBITDA — 7.16× 6.32× — 3.38× —
EV/Sales — 0.88× 0.85× — 3.90× —
P/E P/FCF P/B EV/EBITDA EV/Sales
9.99×22.00×34.02×46.03×10Y avg 17.12×2017201820192020202120222023202420252026

FAF trades at 9.54× P/E, against a 10-year average of 17.12× (range 6.99×–49.56×). That is cheaper than 67% of the last 9 year-end readings; re-rating to the average implies $121.92 per share.

Every growth rate on this page is the business’s — its cash flow, FFO or dividend — never its share price’s. A discounted-cash-flow model is only as good as its assumptions. Figures from the 10-K and 10-Q filings. Not investment advice.