First American Corporation (New) Common Stock (FAF)

FairStock Score: 81/100 — HIGH CONVICTION

Key Financials

Strengths

• Generates $558 million in annual free cash flow (8.0% yield on market cap)
• Solid return on equity of 12.0% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.48, providing financial flexibility
• Revenue growth of 21.7% demonstrates strong top-line momentum
• Attractive 3.3% dividend yield providing steady income returns

Concerns

• Altman Z-Score of 0.9 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

First American Corporation (New) Common Stock is a small-cap financial services company valued at $7.0 billion. The business generates $7.5 billion in annual revenue with a 1.7% net margin and $558 million in free cash flow. From a quality standpoint, First shows distressed Altman Z-Score of 0.9 warrants caution and adequate 12% ROE. On valuation, the stock is attractively valued at 11.5x earnings, with a modest 20% margin of safety vs Graham Number. Growth dynamics show revenue growing at 21.7% and profit growth of 192.7%. The 3.3% dividend yield adds an income component for patient holders. Our composite FairStock Score of 81/100 reflects strong fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

First's 22% revenue growth trajectory could accelerate as it captures additional market share in the financial services sector. With $558 million in annual free cash flow (8.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer