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First American Financial (FAF) Surges 5.6%: Is This an Indication of Further Gains?

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First American Financial (FAF - Free Report) shares soared 5.6% in the last trading session to close at $61.28. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.2% loss over the past four weeks.

The surge in price reflects investors' optimism on the announcement of a 90-day pause on tariffs imposed by President Trump on most countries, though a 10% tariff stays in place. 

Increased demand among millennials for first-time home purchases, the expansion of valuation and data businesses and strength in commercial business and technological upgrades should help FAF perform solidly.

First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology poise FAF well for long-term growth.

This financial services company is expected to post quarterly earnings of $0.67 per share in its upcoming report, which represents a year-over-year change of +48.9%. Revenues are expected to be $1.52 billion, up 7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For First American Financial, the consensus EPS estimate for the quarter has been revised 1.1% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on FAF going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

First American Financial is a member of the Zacks Insurance - Property and Casualty industry. One other stock in the same industry, Allstate (ALL - Free Report) , finished the last trading session 5.2% higher at $193. ALL has returned -9% over the past month.

For Allstate, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $4.01. This represents a change of -21.8% from what the company reported a year ago. Allstate currently has a Zacks Rank of #3 (Hold).


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