First Advantage (FA) AI Stock Analysis

• Market Cap: $2.60B
• Dividend Yield: N/A
• Average Volume (3M): 814.61K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.04
• Revenue Growth: 93.41%
• EPS Growth: -2515.85%
• Country: US
• Employees: 10,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.30
• Shares Outstanding: 174,114,960
• 10 Day Avg. Volume: 700,232
• 30 Day Avg. Volume: 814,608
• PEG Ratio: 0.07
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 3.24
• P/FCF Ratio: 105.11
• Enterprise Value/Market Cap: 1.76
• Enterprise Value/Revenue: 3.13
• Enterprise Value/Gross Profit: 6.82
• Enterprise Value/Ebitda: 17.95
• 1Y Price Target: $17.33
• Price Target Upside: 14.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 51 Neutral
• Price Target: $15.00 ▼(-0.53% Downside)

First Advantage's overall score is driven by strong revenue growth and positive cash flow management. However, negative profitability metrics and bearish technical indicators weigh heavily. The earnings call provided some optimism with successful acquisition integration and improved retention, but sector-specific challenges and a flat hiring environment remain concerns.

Positive Factors

Strong Revenue Growth

Exceptional top-line growth indicates expanding demand for screening and verification services, strengthening network effects with data suppliers and ATS integrations. Sustained revenue expansion improves scale economics, supports reinvestment, and underpins product development and international expansion over months.

Stable Balance Sheet / Low Leverage

A low debt-to-equity profile and healthy equity ratio provide financial flexibility for M&A, technology investment, or cyclical headwinds. Reduced leverage lowers refinancing and covenant risks, enabling multi-quarter strategic execution without material balance-sheet constraints.

High Retention & Acquisition Synergies

Very high retention and faster-than-expected integration synergies from the Sterling acquisition increase recurring revenue base and margin upside. Durable customer stickiness plus realized cost synergies bolster long-term profitability potential and scale in enterprise bookings.

Negative Factors

Negative Profitability

Persistently negative operating and net margins indicate the company has yet to translate revenue growth into sustainable profits. This constrains free cash flow conversion, limits reinvestment capacity, and raises reliance on continued efficiency gains or pricing power to achieve durable profitability.

Declining Gross Margin

A downward trend in gross margin points to rising data, service or labor costs and/or reduced pricing power. Over multiple quarters this erodes the company’s ability to fund SG&A and technology, pressuring adjusted EBITDA unless offset by scale, higher-value products, or better supplier economics.

Sector Headwinds: Healthcare & Hiring

Structural weakness in healthcare funding and a persistently flat hiring market reduce addressable transaction volumes for background screening. This can depress baseline growth and make revenue sensitive to sector-specific budgets, prolonging the timeline to achieve steady margin expansion.

First Advantage Business Overview & Revenue Model

Company Description

First Advantage Corporation provides technology solutions for screening, verifications, safety, and compliance related to human capital worldwide. It offers pre-onboarding products and solutions, such as criminal background checks, drug/health screening, extended workforce screening, FBI channeling, identity checks and biometric fraud mitigation tools, education/work history verification, driver records and compliance, healthcare credentials, executive screening, and other screening products. The company also provides post-onboarding solutions, including criminal records monitoring, healthcare sanctions, motor vehicle records, social media screening, and global sanctions and licenses; and fleet/vehicle compliance, hiring tax credits and incentives, resident/tenant screening, and investigative research. Its products and solutions are used by personnel in recruiting, human resources, risk, compliance, vendor management, safety, and/or security in global enterprises, mid-sized, and small companies. The company was formerly known as Fastball Intermediate, Inc. and changed its name to First Advantage Corporation in March 2021. First Advantage Corporation was founded in 2003 and is headquartered in Atlanta, Georgia.

How the Company Makes Money

First Advantage generates revenue primarily through its background screening services, which are offered on a subscription and pay-per-use basis. The company's key revenue streams include fees charged for individual background checks, bundled screening packages, and ongoing screening programs for large enterprises. Additionally, FA has established significant partnerships with various technology and data providers, enhancing its service offerings and operational efficiency. The company also benefits from cross-selling opportunities by providing ancillary services, such as drug testing and occupational health services, to existing clients, further contributing to its earnings.

First Advantage Financial Statement Overview

Summary

First Advantage shows strong revenue growth and a stable balance sheet with low leverage. However, profitability is a concern with negative margins and return on equity. Cash flow management is positive, but operational efficiency needs improvement.

Income Statement

First Advantage shows a mixed performance in its income statement. The company has experienced significant revenue growth, particularly in the TTM period, indicating a positive trajectory. However, profitability metrics such as net profit margin and EBIT margin are negative, reflecting challenges in converting revenue growth into profit. The gross profit margin has declined over time, suggesting increased cost pressures or pricing challenges.

Balance Sheet

The balance sheet of First Advantage reveals a stable equity position with a low debt-to-equity ratio in the TTM period, indicating reduced leverage risk. However, the return on equity is negative, highlighting inefficiencies in generating returns for shareholders. The equity ratio remains healthy, suggesting a solid capital structure.

Cash Flow

Cash flow analysis shows improvement in free cash flow growth and a strong free cash flow to net income ratio, indicating effective cash management. However, the operating cash flow to net income ratio is low, suggesting potential issues in converting accounting profits into cash. Overall, cash flow stability is a positive aspect for the company.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.46B	860.21M	763.76M	810.02M	712.29M	509.15M
Gross Profit	670.56M	411.29M	376.98M	401.10M	360.13M	248.60M
EBITDA	254.84M	83.15M	210.99M	232.52M	195.13M	135.11M
Net Income	-138.66M	-110.27M	37.29M	64.60M	16.05M	-84.02M
Balance Sheet
Total Assets	3.86B	3.92B	1.63B	1.89B	1.89B	1.76B
Cash, Cash Equivalents and Short-Term Investments	216.85M	168.69M	213.77M	393.61M	293.58M	154.09M
Total Debt	2.12B	2.16B	567.74M	569.49M	554.85M	787.97M
Total Liabilities	2.55B	2.62B	723.92M	759.21M	754.34M	969.42M
Stockholders Equity	1.30B	1.31B	906.73M	1.13B	1.13B	794.27M
Cash Flow
Free Cash Flow	28.45M	26.48M	135.12M	184.24M	124.88M	34.53M
Operating Cash Flow	43.52M	28.20M	162.82M	212.77M	148.68M	52.24M
Investing Cash Flow	-1.67B	-1.65B	-66.85M	-48.60M	-72.43M	-17.61M
Financing Cash Flow	1.53B	1.58B	-273.56M	-59.15M	63.85M	36.68M

First Advantage Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 15.08
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FA, the sentiment is Neutral. The current price of 15.08 is below the 20-day moving average (MA) of 15.15, above the 50-day MA of 14.24, and below the 200-day MA of 15.58, indicating a neutral trend. The MACD of 0.19 indicates Positive momentum. The RSI at 53.19 is Neutral, neither overbought nor oversold. The STOCH value of 34.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FA.

First Advantage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LZ	72 Outperform	$1.63B	71.30	16.96%	―	7.17%	-5.86%
UNF	70 Outperform	$3.69B	28.10	6.93%	0.71%	0.20%	2.72%
ABM	69 Neutral	$2.71B	17.39	9.10%	2.20%	4.62%	102.72%
CBZ	66 Neutral	$2.80B	33.44	7.44%	―	59.19%	-35.47%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BV	59 Neutral	$1.26B	303.68	3.13%	―	-3.40%	-51.58%
FA	51 Neutral	$2.60B	-17.98	-12.48%	―	93.41%	-2515.85%