Waiting Is the WorkDEEP VALUE · IN THE OPEN

New York Stock Exchange (NYSE) · Financial Services

First American Financial Corporation FAF

MonitorScore band: 50–60

Last evaluation
2026-09-06
Deep report
2026-09-02 (translated from Romanian)

Scored as a financial: return on invested capital has no meaning for a bank or an insurer, so that criterion is removed from both the score and the maximum.

The thesis, in one sentence

The second-largest American title insurer, a regulated oligopoly with high-quality earnings, but once the holding company's real cash position is used the margin of safety is thin and the zero-growth value sits below the price.

Written for this site in plain English, without figures. The arithmetic is in the full report.

The thesis is from the deep report of 2026-09-02; the verdict badge reflects the latest scoring of 2026-09-06.

Key risks

  • All the profit growth comes from price and commercial mix, not volume
  • Loss reserve cushion has thinned through three years of prior-year releases
  • Capital spending has run below depreciation for three consecutive years

What would change the verdict

  • Revenue growth turns negative, removing the growth assumption
  • Operating margin falls as the commercial cycle slows for two consecutive quarters
  • Days sales outstanding rise for two consecutive quarters
  • Net margin falls as reserve releases stop for two consecutive quarters

Read it yourself

Step five of the method is the reader's: open the latest annual or quarterly report and read it before acting on anything here. A score is a summary, and a summary is not understanding.

Filings at SEC EDGAR →

Next report expected 2026-10-21. The deep report was written against the filings available on 2026-09-02; anything published since is not in it.

Price, one year

up daydown day

Daily bars for the last year, drawn relative to the latest close, with no price axis. The shape of the year, not a price.

DCF valuation range

range of the DCF modelsbase casetoday's price

Valuation range, shape only. Figures in the full version.

Monte Carlo outcome shape

scenarios below today's pricescenarios above today's pricetoday's price

Distribution of simulated outcomes around today's price. Bar heights only; the scale and the percentiles are in the full version.

Chapter one: What I inherit and what I re-derive (REFRESH mode note)

Deep-value analysis — FAF (First American Financial Corporation)

Date: 2026-09-02 · Mode: REFRESH over the 2026-07-28 thesis · Reference price: … (tracker, 09/02/2026) · Market cap: 7.51 bn. USD Primary sources: 10-K FY2025 (filed 02/18/2026), 10-Q Q2-2026 (filed 07/23/2026), 10-Q Q2-2025 (07/25/2025), 10-K FY2024 (02/21/2025), XBRL data pack 09/02/2026, research brief 09/02/2026, mc-FAF-20260902.json.

What I inherit and what I re-derive (REFRESH mode note)

The mechanical triage called for a revisit for a single reason: the falsifier "the cyclical recovery after the 2023-2024 low continues" was unverifiable — the script had YoY revenue growth for Q2-2026 (…) but was missing a second consecutive quarter. No new SEC filing appeared after 07/28/2026 (next report: 10/21/2026). The price move (…, from … to 73.28/…) is context, not cause.

Inherited without re-verification (nothing moved in the data): the business description and moat structure, ALTA's competitive position, the segment structure, the 2023-2024 normalization history, the corporate debt maturity schedule and the absence of any acquisition. I recap them concisely, with the figures re-anchored to 10-K FY2025 / 10-Q Q2-2026.

Fully re-derived:

  1. The broken falsifier. From 10-Q Q2-2026 (income statement, six months): H1-2026 revenue = 3,955.3 mn. vs. H1-2025 = 3,423.6 mn. By difference, Q1-2026 = 1,838.0 mn. vs. Q1-2025 = 1,582.3 mn. → … YoY. With Q2-2026 at … (2,117.3 vs. 1,841.3, a figure confirmed directly in the MD&A: "+276.0 mn., or 15.0%"), I have two consecutive quarters of positive revenue growth. The falsifier does NOT trigger — the cyclical recovery holds. The research brief had 1.84 bn. vs. 1.58 bn. for Q1; the filing figures (1,838.0 / 1,582.3) confirm them to rounding.

  2. The FCF bridge and cash treatment. Here I found a material error in the reference thesis, corrected in the valuation chapter: the 07/28/2026 report added +… mn. USD of "net cash" to each of the 5 models. That cash isn't the shareholder's (proof, below, from the 10-Q). The correction is worth ~…/share, i.e. ~14% of the price, and lowers all the models.

  3. The two chapters missing from the reference report — the O'Glove analysis and the Outsider profile — are written here from scratch, on figures from the filings.

  4. Monte Carlo rerun with declared assumptions (the old report couldn't run: sh, px, fx were missing from the tracker; I supplied them explicitly).

Figures were removed from this excerpt. The full report opens free for five tickers a week — see what's open now.

Full report contents

  1. What I inherit and what I re-derive (REFRESH mode note)
  2. 🔒 Executive summary (Available in the full report)
  3. 🔒 The business and its moat (Available in the full report)
  4. 🔒 Management and capital allocation (Available in the full report)
  5. 🔒 What changed in the last 4 quarters (Available in the full report)
  6. 🔒 Balance sheet analysis — Quality of Earnings (Available in the full report)
  7. 🔒 The CEO profile — Outsider traits (Available in the full report)
  8. 🔒 Accounting red flags (Available in the full report)
  9. 🔒 Triangulated valuation (Available in the full report)
  10. 🔒 Pre-mortem (Available in the full report)
  11. 🔒 Verdict compared with the GBL score (Available in the full report)

Evaluation history

DateVerdict
2026-07-27Interesting
2026-07-28Monitor
2026-09-02Monitor
2026-09-06Monitor

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