First American's Q3 2026 EPS Rises to $1.72 GAAP, $1.78 Adjusted

What happened

First American Financial reported third quarter 2026 earnings per diluted share of $1.72 on a GAAP basis and $1.78 on an adjusted basis, up from $1.70 adjusted EPS in Q3 2025. The quarter included net investment losses of $2 million, a modest drag of one cent per share, likely reflecting realized losses in the investment portfolio. The company did not provide revenue or segment margin details in the initial release, but the EPS growth suggests continued improvement in title insurance volumes and profitability as the housing market recovers. Cash generation and capital returns, including dividends and buybacks, are expected to remain supportive based on the company's track record and strong balance sheet. The results are consistent with the company's positioning as a scale leader in title insurance exiting a cyclical trough.

Implication

Investors should view the Q3 2026 results as broadly positive, with adjusted EPS growth of about 5% year-over-year reaffirming the cyclical recovery. The small net investment loss is not a concern given the company's sizable investment portfolio and prior gains, but it highlights the need to track realized gains/losses. The lack of disclosed margin data means we cannot confirm whether the double-digit title pretax margin has been maintained, though EPS growth suggests it likely remained healthy. With the housing market gradually normalizing and the company investing in technology to reduce costs, the long-term earnings power appears intact. However, the stock's valuation at a P/E of around 13.5 leaves limited room for error if mortgage rates rise again or if there is a cyber incident, so continued monitoring of order trends and margin durability is prudent.

Thesis delta

The Q3 2026 results reinforce the existing BUY thesis, with adjusted EPS growth indicating continued operational improvement. No material shift is warranted based on this release, though the small investment loss introduces a minor element of caution. The core assumptions of cyclical recovery and margin sustainability remain intact, pending full details on revenue and segment profitability.