In addition, title insurer First American Financial Corp. (FAF) gained +28.24% due to a solid earnings report. Wall Street had expected the company to earn $0.43 per share, but First American delivered $0.68 on very strong revenue growth driven by heavy refinancing activity. In our opinion, the analyst community continues to underappreciate the company's considerable operating leverage. Pretax margins were 11.7% for the quarter, well ahead of the company's full-year goal of 8%-10%. Despite the stock's considerable gains this year, it continues to be a remarkable bargain in our opinion; it still trades below its book value. As the market comes around to the now widespread view that housing-related companies are connected to a strong segment of the economy rather than a weak one, we think the valuation penalty they have lately suffered is reasonably likely to disappear or even turn into a benefit.
From Ariel Funds' third quarter commentary.
From Ariel Funds' third quarter commentary.
