Fidelity National Financial (FNF) to Acquire BPG Holdings - Analyst Blog

A leading provider of title insurance, technology and transaction services to the real estate and mortgage industries, Fidelity National Financial, Inc. (FNF) inked a deal to acquire BPG Holdings, LLC. Notably, closure of the transaction is subject to regulatory approval, which includes the State of California Department of Insurance.

BPG Holdings is an acknowledged home warranty, home inspection services and commercial inspections leader, the merger of which with Fidelity National Home Warranty would result in the formation of California's largest home warranty company. Moreover, the takeover will increase Fidelity National Financial's Texas-based market shares while catering to other states, thereby expanding its portfolio.

This combination would also help Fidelity National Home Warranty to increase its presence globally, providing it with a platform for future growth.

Acquisitions and partnerships have been key growth catalysts for Fidelity National Financial, which have strengthened the company's existing lines of businesses for some time. Since 2010, it has acquired eight companies, including Lender Processing Services, Inc. (LPS), J. Alexander's Corporation and O'Charley's Inc. (CHUX), thereby significantly expanding Fidelity National Financial's product portfolio.

Notably, Fidelity National Financial's strong liquidity position cushions its inorganic growth.

With respect to earnings performance, the company delivered positive earnings surprises in three of the last four quarters with trailing four-quarter average surprise of 10.4%. The Zacks Consensus Estimate for 2014 and 2015 are currently pegged at $1.70 and $2.21, respectively. The long-term goal is 14.10%.

Zacks Rank

Fidelity National Financial holds Zacks Rank #3 (Hold). A better–ranked stock in the property and casualty insurance sector is AmTrust Financial Services, Inc. (AFSI), which sports a Zacks Rank #1 (Strong Buy).

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