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Reasons Why Fidelity National (FNF) Stock is a Solid Pick Now

Fidelity National Financial Inc. FNF has been gaining momentum on the back of higher direct premiums, agency premiums, strong origination demand and effective capital deployment.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 has moved 0.9% and 0.2% north, respectively, in the past 60 days, reflecting analysts’ optimism.

Earnings Surprise History

Fidelity National has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average beat being 19.70%.

Zacks Rank

Fidelity National currently carries a Zacks Rank #2 (Buy).

Style Score

Fidelity National is poised for progress, which is evident from its favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Return on Equity (ROE)

FNF’s return on equity in the trailing 12 months was 25.4%, better than the industry average of 6.4%, reflecting efficiency in utilizing shareholders’ funds.

Tailwinds

Premiums are likely to have increased on higher direct premiums, agency premiums, and escrow, title-related and other fees.

FNF is likely to have benefited from strong origination demand and continued rebound in commercial real estate activity.

Higher order volumes are expected to drive its commercial performance.

Expanded distribution channels and attractive spreads despite the low interest rate environment are expected to have aided sales at F&G Annuities & Life. Assets under management are expected to have benefited from solid retail annuity sales and F&G's interest in institutional markets.

Fidelity National continues to make investments in technology to widen its market-leading position.

FNF remains focused on ensuring a balanced capital allocation strategy by making investments in title technology and other strategic initiatives to support innovation and organic growth in the business.

The acquisition of F&G Annuities & Life, a leading provider of annuity and life insurance concentrated in the middle-income market, provides Fidelity National with a diversified growth strategy and shields it from the volatility integral to the core title insurance business.

The title insurer has a solid balance sheet, cushioning dividend payouts, share buybacks, mergers and acquisitions, organic growth initiatives and debt payments.
Fidelity National has increased dividends for the last 11 years at a nine-year CAGR of 12.1%. The dividend yield is 4.5%, better than the industry average of 0.4%.

Fidelity National also has an impressive Value Score of A that reflects an attractive valuation of the stock.

Price Performance

In the past year, the stock has lost 15.6% compared with the industry’s decline of 1.4%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the insurance industry are ProAssurance Corporation PRA, American Financial Group, Inc. AFG and Axis Capital Holdings Limited AXS. While ProAssurance sports a Zacks Rank #1 (Strong Buy), American Financial and Axis Capital carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 13.5%.

The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 60 days.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 5.2%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 2.7% and 3.1% north, respectively, in the past 60 days.

The bottom line of Axis Capital surpassed earnings estimates in each of the last four quarters, the average being 48.08%. In the past year, the insurer has rallied 4.4%.

The Zacks Consensus Estimate for Axis Capital’s 2022 and 2023 earnings indicates a 25.2% and 9.71% increase, respectively from the year-ago reported figure.


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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
 
ProAssurance Corporation (PRA) : Free Stock Analysis Report
 
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
 
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