Fidelity National Financial, Inc.’s FNF second-quarter 2017 adjusted earnings from continuing operations of 75 cents per share beat the Zacks Consensus Estimate of 72 cents by 4.2%. Also, the bottom line improved 1.4% year over year.
In the second quarter, the company witnessed yet another solid performance by its title insurance business. Notably, the quarter marked the largest amount of quarterly adjusted pre-tax title earnings since 2003.
Fidelity National also anticipates the residential purchase and commercial markets to drive its performance in 2017, which is already reflected in the reported quarter. Also, the insurer expects a strong industry-leading performance from its title insurance business in the near term.
Fidelity National Financial, Inc. Price, Consensus and EPS Surprise
Fidelity National Financial, Inc. Price, Consensus and EPS Surprise | Fidelity National Financial, Inc. Quote
Behind the Headlines
Revenues of about $2.3 billion increased 9.5% year over year. Improvement in both Direct and Agency title premiums, as well as Escrow, title related and other fees drove the year-over-year growth. Also, the top line beat the Zacks Consensus Estimate by 8.1%.
Title segment revenues rose 5% year over year to $1.9 billion from $1.8 billion. Adjusted pre-tax earnings improved 3.3% year over year to $310 million. Total commercial revenue increased 7% year over year to $261 million. Average fee per file climbed 15% from the year-ago quarter, while title claim plunged 21.9% year over year.
For the other segment known as Black Knight Financial Services, Inc. (BKFS – Research Report), the company reported revenues of $242 million, of which Servicing Technology revenues contributed approximately $184 million. The company reported pre-tax earnings of $29 million, which sank 29% from the year-ago quarter.
Total expenses in the second quarter came in at about $2 million, up 8.1% from $1.8 million in the year-ago quarter. Higher personnel cost, other operating expenses, depreciation and amortization and interest expense were primarily responsible for the increase in expenses.
Adjusted earning before interest, taxes, depreciation and amortization (EBITDA) was $437 million compared with $417 million in the year-ago period. EBITDA margin in the second quarter was 19% compared with 19.5% in the prior-year quarter.
Financial Update
Net cash flows from operations stood at $401 million, having soared 44.8% from the year-ago quarter.
Zacks Rank
Fidelity National currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at Brown & Brown, Inc. BRO and RLI Corp. RLI beat the respective Zacks Consensus Estimate, while The Progressive Corporation PGR missed the same.
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