Shares of Fidelity National Financial FNF have gained 46.5% in a year compared with the industry and the Finance sector’s rally of 40.8% and 46.4%, respectively. The Zacks S&P 500 composite has increased 40.1% in the said time frame. With a market capitalization of $12.7 billion, average volume of shares traded in the last three months was 1.5 million.
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Leading market share in the residential purchase, refinance, and commercial markets, industry-leading margins, and solid capital position continue to drive Fidelity National. It has a solid track of beating earnings estimates in the trailing four quarters, the average surprise being 38.65%.
Return on equity in the trailing 12 months was 23.7%, better than the industry average of 5.6%. This highlights the company’s efficiency in utilizing shareholders’ fund.
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 9.2% and 2.1%, respectively, in the past 60 days, reflecting analysts’ optimism.
Will the Bull Run Continue?
The Zacks Consensus Estimate for 2021 indicates year-over-year improvement of 2.4% on 8.7% higher revenues. The company has a favorable VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
Being the nation’s largest title insurance and settlement services company, Fidelity National boasts leading market share in the residential purchase, refinance, and commercial markets. Thus, it remains well poised to gain from the U.S. real estate market. It also delivers industry-leading margins.
It diversified from core title insurance business and lower risk and volatility integral to the core title insurance business and thus acquired FGL Holdings, a life and annuity insurance company focusing on the middle-income market, last year.
Given a low rate environment, this Zacks Rank #2 (Buy) title insurer should continue to witness momentum in refinance volumes, strong purchase demand and rebound in commercial real estate activity.
Riding on a solid capital position, the company has been hiking dividends for the last 10 years. Dividends increased at a five-year CAGR (2015-2020) of nearly 12.3%. It also targets $500 million of share repurchases over the next one-year period. Its dividend yield of 3.7% appears attractive compared with the industry average of 0.5% making it an attractive pick for yield-seeking investors.
Its shares are currently undervalued. Its price to earnings multiple of 8.5 is much lower than the industry average of 28.9. It also has an impressive Value Score of A. Before valuation expands, its better to take position in the stock.
Other Stocks to Consider
Some other top-ranked stocks worth considering include Axis Capital Holdings Limited AXS, Cincinnati Financial Corporation CINF, and Alleghany Y.
Axis Capital delivered an earnings surprise of 49.23% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial delivered an earnings surprise of 30.48% in the last reported quarter. It carries a Zacks Rank #2.
Alleghany delivered an earnings surprise of 110.97% in the last reported quarter. It carries a Zacks Rank #2.
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