Fidelity National Financial Inc.’s FNF leading market share in the residential purchase, refinance, and commercial markets, industry-leading margins, solid capital position along with favorable estimates revision make it a good investment choice.
Return on equity in the trailing 12 months was 25.2%, better than the industry average of 5.8%, reflecting efficiency in utilizing shareholders’ fund.
This Zacks Rank #1 (Strong Buy) title insurer has a stellar track of beating earnings estimates in the trailing 12 quarters.
However, year to date, the stock has lost 19.5% against the industry’s increase of 13.5%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $7.00, indicating an increase of 7.3% on 4% higher revenues of $13.7 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 has moved 3.3% north in the past 30 days, reflecting analyst optimism.
The U.S. real estate market has been showing signs of recovery lately. Fidelity National, having a leading market share in the residential purchase, refinance, and commercial markets, is poised to benefit from an improving U.S. real estate market.
The acquisition of F&G Annuities & Life, a leading provider of annuity and life insurance concentrated in the middle-income market, provides Fidelity National a diversified growth strategy and shields it from the volatility integral to the core title insurance business.
The nation’s largest title insurance and settlement services company should continue to witness momentum in refinance volumes, strong purchase demand and a rebound in commercial real estate activity. The market-leading position offers scale and competitive advantage by fueling revenues and lowering costs. FNF has been delivering industry-leading margins.
Fidelity National has a solid balance sheet that supports effective capital deployment including dividends, share buyback, mergers and acquisitions, organic growth initiatives and debt payment.
FNF carries an impressive VGM Score of B.
Impressive Dividend History
Fidelity National has increased dividends for the last 11 years at a nine-year CAGR of 12.1%. The dividend yield is 3.4%, better than the industry average of 0.4%.
The stock is currently trading at price to book value of 1.26, cheaper than the industry average of 1.36.
The stock carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank are the best investment bets.
Other Stocks to Consider
Some other top-ranked stocks from the insurance sector are Berkshire Hathaway Inc. (BRK.B), First American Financial Corporation FAF and Kinsale Capital Group, Inc. KNSL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Berkshire Hathaway surpassed earnings estimates in three of the last four quarters, missed in one, the average being 11.86%. Year to date, the stock has gained 13.5%.
The Zacks Consensus Estimate for BRK.B’s 2022 earnings has moved 0.5% north in the past 30 days.
First American has a solid track record of beating earnings estimates in five of the last six quarters. The stock has lost 24.9% year to date.
The Zacks Consensus Estimate for FAF’s 2022 and 2023 earnings has moved 2.9% and 0.7% north, respectively in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. Year to date, Kinsale Capital has lost 4.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.