Is Fairfax Financial (TSX:FFH) undervalued?

RBC Capital Markets analyst Bart Dziarski says Fairfax Financial (Fairfax Financial Holdings Stock Quote, Chart, News, Analysts, Financials TSX:FFH) remains his top value pick after an in-line Q2 that continued to build intrinsic value.

As reported by the Globe and Mail, in his August 4 report, Dziarski maintained his “Outperform” rating on Fairfax and raised his target to $2,316 from $2,277.

“Q2/26 was an ‘in-line’ quarter but intrinsic value under the hood continues to be generated,” Dziarski said.

Fairfax reported Q2 net earnings of $1.39-billion, or $63.38 per diluted share, compared with net earnings of $1.44-billion, or $61.61 per diluted share, a year earlier.

Book value per basic share was $1,304.39 at June 30, up from $1,260.19 at the end of 2025, or 4.8% after adjusting for the $15 per-share dividend paid in Q1.

Fairfax’s property and casualty insurance and reinsurance operations generated adjusted operating income of $1.11-billion, compared with $1.13-billion a year earlier. The combined ratio was 93.1%, with underwriting profit of $458.6-million.

Gross premiums written rose 4.1%, led by growth in international insurance and reinsurance, while net premiums written increased 2.4%.

Fairfax reported net investment gains of $768.9-million, mainly from equity exposures. That included an $838.4-million realized gain on the sale of 23.1% of Poseidon, partly offset by mark-to-market bond losses tied to higher interest rates.

Dziarski said Fairfax also benefited from unrealized gains rising to $4.4-billion, gains crystallization from a 25% reduction in its total return swap position and active share buybacks.

During the quarter, Fairfax repurchased 680,307 subordinate voting shares for cancellation for $1.09-billion, or $1,601 per share.

Dziarski said the balance sheet remains strong, with $2.3-billion of cash and a 28% leverage ratio. He said Fairfax is on track to exceed all three of its key performance indicators.

The analyst said Fairfax shares remain overly discounted at 1.1 times forward price-to-book.

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