MeritValue

First American Financial Corp

FAFdata completeness 88%18 fiscal years on file

Data notes: no data for concept 'totalDebt'

The thesis, from the filings

First American Financial Corp earns about 18% on invested capital, far above its ~9% cost of capital, and has bought back 7% of its shares over 5 years — the marks of a durable business run for its owners. The estimate methods put fair value between $26.28 and $106.96 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$9.22B1$7.61B2$6B3$6.13B3$7.45B3
Net income$1.24B4$263M5$216.8M6$131.1M6$621.8M6
Operating cash flow$1.22B7$777.6M8$354.3M9$897.5M9$950.8M9
Capital expenditure$160.5M10$259.8M11$263.4M12$218.3M12$188.3M12
Free cash flow (derived)$1.06B7$517.8M8$90.9M9$679.2M9$762.5M9
Total debt—————
Cash & equivalents$1.23B13$1.22B14$3.61B15$1.72B16$1.39B16
Diluted shares111.4M107.3M104.6M104.3M103.7M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$530.33
your share of equity
Profit it earned you last year
$59.96
Free cash flow it threw off
$73.53
Debt you’d be carrying
—

10 shares is a claim on $530.33 of net worth that earned you $59.96 and generated $73.53 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
18% avg · 5y
FY21 29%FY22 10%FY23 26%FY24 8%FY25 18%

It earned about 18% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−7% shares · 5y

Share count is down 7% over 5 years — management has been buying back stock, quietly handing owners a bigger slice.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $26.28 and $106.96 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$99.91
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth0.0%
  • fcfBase$679.2M
DCF · Growth Exit 5Y
$106.96
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth0.0%
  • fcfBase$679.2M
Earnings Power Value
$26.28
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$263M
  • growthAssumed0.0%
Graham Number
$84.61
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years0.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $106.96
The three cases
Bear0.0%$106.96
Base0.0%$106.96
Bull5.0%$129.61

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 0.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000950170-24-017418 (Revenues)
  2. 10-K · period ending 2022-12-31 · accession 0000950170-25-024488 (Revenues)
  3. 10-K · period ending 2023-12-31 · accession 0001193125-26-055516 (Revenues)
  4. 10-K · period ending 2021-12-31 · accession 0000950170-24-017418 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000950170-25-024488 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001193125-26-055516 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000950170-24-017418 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000950170-25-024488 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001193125-26-055516 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000950170-24-017418 (PaymentsToAcquireProductiveAssets)
  11. 10-K · period ending 2022-12-31 · accession 0000950170-25-024488 (PaymentsToAcquireProductiveAssets)
  12. 10-K · period ending 2023-12-31 · accession 0001193125-26-055516 (PaymentsToAcquireProductiveAssets)
  13. 10-K · period ending 2021-12-31 · accession 0000950170-23-002816 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0000950170-24-017418 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0000950170-25-024488 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2024-12-31 · accession 0001193125-26-055516 (CashAndCashEquivalentsAtCarryingValue)