Financial Survey: Bowhead Specialty (NYSE:BOW) & First American Financial (NYSE:FAF)

Bowhead Specialty (NYSE:BOW) and First American Financial (NYSE:FAF) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Valuation and Earnings

This table compares Bowhead Specialty and First American Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bowhead Specialty	$425.66 million	1.95	$38.24 million	$1.56	16.25
First American Financial	$6.13 billion	1.06	$131.10 million	$4.65	13.65

First American Financial has higher revenue and earnings than Bowhead Specialty. First American Financial is trading at a lower price-to-earnings ratio than Bowhead Specialty, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

89.1% of First American Financial shares are held by institutional investors. 3.7% of First American Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Bowhead Specialty and First American Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bowhead Specialty	0	4	5	0	2.56
First American Financial	0	2	3	0	2.60

Bowhead Specialty presently has a consensus target price of $33.83, indicating a potential upside of 33.49%. First American Financial has a consensus target price of $75.75, indicating a potential upside of 19.36%. Given Bowhead Specialty’s higher probable upside, equities analysts plainly believe Bowhead Specialty is more favorable than First American Financial.

Profitability

This table compares Bowhead Specialty and First American Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bowhead Specialty	10.12%	13.53%	2.91%
First American Financial	6.80%	11.01%	3.50%

Volatility & Risk

Bowhead Specialty has a beta of -1.06, indicating that its share price is 206% less volatile than the S&P 500. Comparatively, First American Financial has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.

Summary

First American Financial beats Bowhead Specialty on 8 of the 14 factors compared between the two stocks.

About Bowhead Specialty

Bowhead Specialty Holdings Inc. provides specialty property and casualty insurance products in the United States. It underwrites casualty insurance solutions for risks in the construction, distribution, heavy manufacturing, real estate, and hospitality segments; professional liability insurance solutions for financial institutions, private and public directors and officers liability insurance, errors and omissions liability insurance, and cyber segments; and healthcare solutions for hospitals, senior care providers, managed care organizations, miscellaneous medical facilities, and healthcare management liability segments. The company distributes its products through distribution partners in wholesale and retail markets. Bowhead Specialty Holdings Inc. was formerly known as Bowhead Holdings Inc. and changed its name to Bowhead Specialty Holdings Inc. in March 2024. The company was founded in 2020 and is based in New York, New York. Bowhead Specialty Holdings Inc. operates as a subsidiary of Bowhead Insurance Holdings LP.

About First American Financial

First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Home Warranty segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services internationally. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, document generation services, mortgage loans subservicing, and related products and services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in various states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, New Zealand, South Korea, and internationally. The Home Warranty segment provides home warranty products, including residential service contracts that cover residential systems, such as heating and air conditioning systems, and various appliances against failures that occur as the result of normal usage during the coverage period. This segment operates in various states and the District of Columbia. The company was founded in 1889 and is headquartered in Santa Ana, California.