First American Financial Corporation (NYSE:FAF) Stock Is Going Strong But Fundamentals Look Uncertain: What Lies Ahead ?
First American Financial Corporation (NYSE:FAF) Stock Is Going Strong But Fundamentals Look Uncertain: What Lies Ahead ?
First American Financial (NYSE:FAF) has had a great run on the share market with its stock up by a significant 6.5% over the last month. However, we decided to pay attention to the company's fundamentals which don't appear to give a clear sign about the company's financial health. Particularly, we will be paying attention to First American Financial's ROE today.
First American Financial (纽交所: FAF)的股票在股市上表现不错，上个月涨了6.5%。但是我们决定关注公司的基本面，这些基本面似乎并没有给出关于公司财务健康情况的清晰提示。特别是，今天我们将关注First American Financial的roe。
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Put another way, it reveals the company's success at turning shareholder investments into profits.
ROE（净资产收益率）是股东需考虑的一个重要因素，因为它告诉他们资本被有效地再投资的效果如何。换句话说，它揭示了公司将股东的投资转化为利润的成功程度。
How Do You Calculate Return On Equity?
怎样计算ROE?
ROE can be calculated by using the formula:
净资产收益率可以使用以下公式进行计算：
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
净资产收益率 = 净利润（从持续经营中获得）÷ 股东权益
So, based on the above formula, the ROE for First American Financial is:
因此，根据上述公式，First American Financial的roe为:
4.5% = US$216m ÷ US$4.8b (Based on the trailing twelve months to March 2024).
4.5% = 2.16亿美元÷ 48亿美元（根据截至2024年3月的过去十二个月计算）。
The 'return' refers to a company's earnings over the last year. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.04.
“回报”是指公司过去一年的收益。因此，这意味着对于每个股东的投资1美元，公司会产生0.04美元的利润。
What Has ROE Got To Do With Earnings Growth?
ROE与盈利增长有什么关系？
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don't share these attributes.
到目前为止，我们学到了ROE如何评估公司有效地产生利润。根据公司再投资或“保留”的这些利润的多少以及其如何有效地进行再投资，我们可以评估公司的盈利增长潜力。一般而言，在其他条件相同的情况下，ROE高、利润保留高的公司，比没有这些属性的公司增长率更高。
First American Financial's Earnings Growth And 4.5% ROE
First American Financial的盈利增长和4.5%的roe
On the face of it, First American Financial's ROE is not much to talk about. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 13%. Therefore, it might not be wrong to say that the five year net income decline of 13% seen by First American Financial was probably the result of it having a lower ROE. We reckon that there could also be other factors at play here. For instance, the company has a very high payout ratio, or is faced with competitive pressures.
从表面上看，First American Financial的roe并不值得我们大谈特谈。然后，我们将公司的roe与整个行业进行了比较，并失望地发现，roe低于行业平均值13%。因此，可以说，First American Financial五年来净收入下降13%的原因可能是它拥有较低的roe。我们认为这里可能还存在其他因素，例如公司的支付比率非常高，或者面临激烈的竞争压力。
So, as a next step, we compared First American Financial's performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 8.4% over the last few years.
接下来，我们将First American Financial的业绩与整个行业进行了比较，并失望地发现，虽然该公司一直在缩减其收益，但行业过去几年的收益增长率为8.4%。
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. Is FAF fairly valued? This infographic on the company's intrinsic value has everything you need to know.
评估一家公司的价值在很大程度上取决于其盈利增长。投资者应该尝试确定是否已经定价了预期的盈利增长或下降。这样做将有助于他们确定股票的未来前景是有前途还是不乐观。FAF是否被合理定价?这张关于公司固有价值的信息图包括您需要了解的所有信息。
Is First American Financial Making Efficient Use Of Its Profits?
First American Financial是否有效地利用其利润?
Despite having a normal three-year median payout ratio of 47% (where it is retaining 53% of its profits), First American Financial has seen a decline in earnings as we saw above. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline.
尽管拥有正常的三年中位数支付比率为47%（保留了53%的利润），但正如我们上面所看到的，First American Financial的盈利出现下降。看起来似乎有其他原因可以解释这种情况。例如，业务可能在衰退。
Moreover, First American Financial has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 41%. However, First American Financial's ROE is predicted to rise to 9.3% despite there being no anticipated change in its payout ratio.
此外，First American Financial已经连续十年或更长时间支付股息，这表明管理层认为股东更喜欢股息而不是盈利增长。根据最新的分析师估计，我们发现公司未来三年的支付比率预计将保持在41%的稳定水平。然而，尽管没有预期支付比率的改变，First American Financial的roe预计将上升至9.3%。
Summary
总的来说，我们对伟明环保的表现非常满意。具体而言，我们喜欢公司以高回报率再投资了其利润的很大一部分。当然，这导致公司的收益大幅增长。但是，最新的行业分析师预测表明，该公司的收益预计将加速增长。
In total, we're a bit ambivalent about First American Financial's performance. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
总体而言，我们对First American Financial的表现有些矛盾。虽然该公司有很高的再投资率，但低roe意味着所有这些再投资都没有为其投资者带来任何好处，而且还对盈利增长产生负面影响。因此，最新的行业分析师预测显示，分析师预计该公司的盈利增长率将大幅改善。要了解有关该公司的最新分析师预测的更多信息，请参阅该公司的分析师预测可视化。
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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