Critical Review: Gainsco (OTCMKTS:GANS) and First American Financial (NYSE:FAF)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First American Financial	$7.08 billion	0.90	$131.10 million	$4.65	13.42
Gainsco	N/A	N/A	N/A	N/A	N/A

First American Financial has higher revenue and earnings than Gainsco.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for First American Financial and Gainsco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First American Financial	1	0	4	0	2.60
Gainsco	0	0	0	0	0.00

First American Financial currently has a consensus target price of $76.00, suggesting a potential upside of 21.83%. Given First American Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe First American Financial is more favorable than Gainsco.

Institutional & Insider Ownership

89.1% of First American Financial shares are owned by institutional investors. 3.7% of First American Financial shares are owned by insiders. Comparatively, 73.5% of Gainsco shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First American Financial	6.80%	11.01%	3.50%
Gainsco	N/A	N/A	N/A

Summary

First American Financial beats Gainsco on 8 of the 9 factors compared between the two stocks.

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.

About Gainsco

GAINSCO, Inc. operates as a property and casualty insurance holding company. The company offers non-standard personal auto products, including coverage for third party liability, bodily injury, and physical damage, as well as collision and coverage for theft, physical damage, and other perils for an insured's vehicle. It is also involved in automotive sales and service, auto racing, and investment activities. The company offers its automobile insurance products under the GAINSCO Auto Insurance brand through independent partner agents and Website comparison shopping places. GAINSCO, Inc. was founded in 1978 and is based in Dallas, Texas.