First Advantage (FA) AI Stock Analysis

• Market Cap: $3.15B
• Dividend Yield: N/A
• Average Volume (3M): 1.35M
• Price to Earnings (P/E): 549.4
• Beta (1Y): 1.11
• Revenue Growth: 37.97%
• EPS Growth: -499.29%
• Country: US
• Employees: 10,000
• Sector: Industrials
• Sector Strength: 91
• Industry: Specialty Business Services
• EPS (TTM): 0.17
• Shares Outstanding: 173,673,550
• 10 Day Avg. Volume: 1,437,426
• 30 Day Avg. Volume: 1,351,943
• PEG Ratio: 0.01
• Price to Book (P/B): <0.01
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 188.06
• Enterprise Value/Market Cap: 1.60
• Enterprise Value/Revenue: 1.62
• Enterprise Value/Gross Profit: 12.29
• Enterprise Value/Ebitda: 5.45
• 1Y Price Target: $18.00
• Price Target Upside: -0.99% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

First Advantage's strong market momentum and positive earnings call are significant strengths, showcasing strategic growth initiatives and successful integration of acquisitions. However, challenges such as negative profitability and macroeconomic uncertainties weigh on the valuation. The company’s solid equity and cash flow position provide a stable foundation, but addressing operational efficiency and profitability is key for future improvement.

Positive Factors

Financial Performance

FA's results were ahead of expectations on the top and bottom line, given the record quarter of enterprise dollar bookings and increased package density.

Management Execution

Management continues to execute well on all things under its control, such as Sterling integration, cross-sell/upsell, and new logo growth.

Negative Factors

Hiring Trends

Poor hiring trends and elevated leverage ratio will keep the shares range-bound over the next 12 months.

Macroeconomic Factors

The business's sensitivity to macroeconomic factors could mean a bumpy ride in the short term.

First Advantage Business Overview & Revenue Model

Company Description

First Advantage (FA) is a global provider of technology solutions for screening, verifications, safety, and compliance. The company operates across various sectors including employment, residential, and international background checks. Its core products and services include background screening, identity and information solutions, and analytics services to help businesses make informed hiring decisions and manage risk effectively.

How the Company Makes Money

First Advantage makes money through its comprehensive suite of background screening and verification services, which are offered to businesses across a range of industries. The company's revenue model is primarily based on service fees charged for each screening and verification process conducted. Key revenue streams include employment background checks, identity verification services, and residential screening solutions. Significant partnerships with enterprises and organizations that require regular and large-scale screening contribute to its earnings. Additionally, the company benefits from long-term contracts and recurring revenues from clients who depend on continuous screening services.

First Advantage Financial Statement Overview

Summary

First Advantage demonstrates strong revenue growth and improving balance sheet metrics, but faces challenges in profitability and operational efficiency. With a solid equity base and positive cash flows, the company is well-positioned but needs to address its negative net income and operational losses to enhance financial stability.

Income Statement

The company's revenue has shown steady growth over the years, increasing from $481.8M in 2019 to $860.2M in 2024. However, profitability is a concern with a negative net income in the most recent period (-$110.3M), leading to a negative net profit margin. The gross profit margin has improved, but the company's EBIT margin turned negative in 2024, indicating operational challenges.

Balance Sheet

The balance sheet reflects a relatively strong equity position with a stockholders' equity of $1.31B in 2024, up from $794.3M in 2020. The debt-to-equity ratio has improved significantly, showcasing better leverage management. However, the company has seen fluctuations in total assets and liabilities, with a notable increase in total liabilities in 2024.

Cash Flow

Free cash flow has been positive and growing, indicating efficient cash management. The operating cash flow to net income ratio is strong, suggesting that the company's operations are generating sufficient cash. However, high financing cash flow in 2024 suggests reliance on external funding, which could pose risks if not managed properly.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
860.21M	763.76M	810.02M	712.29M	509.15M
	Gross Profit
411.29M	376.98M	401.10M	360.13M	76.05M
	EBIT
-62.38M	81.52M	94.28M	63.82M	-1.15M
	EBITDA
83.15M	210.99M	232.52M	195.13M	88.96M
	Net Income Common Stockholders
-110.27M	37.29M	64.60M	16.05M	-84.02M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
168.69M	213.77M	393.61M	293.58M	154.09M
	Total Assets
3.92B	1.63B	1.89B	1.89B	1.76B
	Total Debt
2.16B	567.74M	569.49M	554.85M	785.30M
	Net Debt
1.99B	353.97M	177.83M	262.20M	632.49M
	Total Liabilities
2.62B	723.92M	759.21M	754.34M	969.42M
	Stockholders Equity
1.31B	906.73M	1.13B	1.13B	794.27M
Cash Flow		Free Cash Flow
26.48M	135.12M	184.24M	124.88M	34.53M
	Operating Cash Flow
28.20M	162.82M	212.77M	148.68M	52.24M
	Investing Cash Flow
-1.65B	-66.85M	-48.60M	-72.43M	-17.61M
	Financing Cash Flow
1.58B	-273.56M	-59.15M	63.85M	36.68M

First Advantage Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.18
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FA, the sentiment is Positive. The current price of 18.18 is above the 20-day moving average (MA) of 15.83, above the 50-day MA of 14.59, and above the 200-day MA of 17.58, indicating a bullish trend. The MACD of 1.07 indicates Negative momentum. The RSI at 70.53 is Negative, neither overbought nor oversold. The STOCH value of 89.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FA.

First Advantage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	80 Outperform	$3.34B	23.29	7.17%	0.73%	5.04%	31.69%
LZ	75 Outperform	$1.71B	55.19	17.09%	―	3.25%	56.17%
FA	74 Outperform	$3.15B	549.40	-13.59%	―	37.97%	-499.29%
BV	74 Outperform	$1.56B	85.78	2.56%	―	-2.85%	-108.99%
ABM	74 Outperform	$3.27B	41.52	4.46%	1.86%	2.81%	-67.57%
CBZ	73 Outperform	$4.03B	50.43	6.25%	―	32.27%	-40.50%
Sector *	64 Neutral	$4.44B	11.99	5.16%	249.23%	4.01%	-11.87%

First Advantage Corporate Events

First Advantage Expands with Sterling Check Acquisition

First Advantage Corporation has successfully acquired Sterling Check Corp. for $2.2 billion, significantly enhancing its global presence in background screening and identity verification. This strategic move is set to accelerate innovation, particularly in AI and digital identification technologies, while diversifying revenue streams across various industries and geographies. The acquisition promises immediate synergy benefits, boosting earnings per share and improving operational efficiency, making it an exciting development for investors and stakeholders in the financial markets.