First Advantage (FA) AI Stock Analysis

• Market Cap: $2.48B
• Dividend Yield: N/A
• Average Volume (3M): 811.33K
• Price to Earnings (P/E): 549.4
• Beta (1Y): 1.12
• Revenue Growth: 65.34%
• EPS Growth: -633.72%
• Country: US
• Employees: 10,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.27
• Shares Outstanding: 173,990,550
• 10 Day Avg. Volume: 788,965
• 30 Day Avg. Volume: 811,334
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.96
• Enterprise Value/Revenue: 3.88
• Enterprise Value/Gross Profit: 9.35
• Enterprise Value/Ebitda: 26.58
• 1Y Price Target: $20.00
• Price Target Upside: 41.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 49 Neutral
• Price Target: $15.00 ▲(5.93% Upside)

First Advantage's overall score is driven by strong earnings call performance and cash flow growth, but is hindered by poor profitability, high leverage, and bearish technical indicators. The negative P/E ratio further impacts the valuation score.

Positive Factors

Revenue Growth

Strong revenue growth indicates robust demand for First Advantage's services, enhancing its market position and potential for future expansion.

Customer Retention

High customer retention reflects strong client satisfaction and loyalty, providing a stable revenue base and opportunities for upselling and cross-selling.

Cash Flow Growth

Significant cash flow growth enhances financial flexibility, allowing for strategic investments and debt reduction, supporting long-term sustainability.

Negative Factors

Profitability Challenges

Ongoing profitability issues may hinder reinvestment capabilities and affect long-term financial health, requiring strategic cost management.

High Leverage

High leverage can increase financial risk, impacting the company's ability to invest in growth opportunities and weather economic downturns.

Macroeconomic Uncertainty

Macroeconomic uncertainty can lead to reduced demand for screening services, impacting revenue and growth prospects in the near to medium term.

First Advantage Business Overview & Revenue Model

Company Description

First Advantage (FA) is a leading global provider of background screening services, specializing in delivering comprehensive employment screening solutions to various sectors, including healthcare, retail, finance, and technology. The company offers a wide range of services, including criminal background checks, employment verifications, drug testing, and identity verification, leveraging advanced technology and data analytics to ensure timely and accurate results for its clients.

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, but faces profitability challenges with negative net income and margins. The balance sheet is stable with low leverage, but negative return on equity is concerning. Cash flow management issues are present due to declining growth rates in operating and free cash flow.

Income Statement

The income statement shows a mixed performance. Revenue has grown significantly by 21.6% TTM over the previous year, indicating strong growth. However, the company is currently operating at a net loss with a negative net profit margin and EBIT margin, which raises concerns about profitability. The gross profit margin remains healthy at 47% TTM, suggesting good control over cost of goods sold. Despite the positive trend in revenue, the consistent net losses are a significant weakness.

Balance Sheet

The balance sheet reflects moderate financial stability. The debt-to-equity ratio is low at 0.03 TTM, indicating low leverage, which is a positive sign. The equity ratio stands at 33%, which shows a reasonable portion of assets financed by equity. However, the return on equity is negative due to the net losses, which is a critical issue. Overall, the company's low leverage and decent equity position are strengths, but the negative profitability impacts the score.

Cash Flow

The cash flow statement presents a mixed picture. Operating cash flow is positive, though significantly reduced in TTM compared to the previous year, indicating potential operational cash constraints. Free cash flow is positive at $3.43 million TTM, but the free cash flow growth rate is negative, which is concerning. The free cash flow to net income ratio cannot be evaluated due to negative net income. The ability to generate free cash flow is a strength, but the decline in operating cash flow and free cash flow growth are weaknesses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.25B	860.21M	763.76M	810.02M	712.29M	509.15M
Gross Profit	519.78M	411.29M	376.98M	401.10M	360.13M	76.05M
EBITDA	182.85M	83.15M	210.99M	232.52M	195.13M	88.96M
Net Income	-150.11M	-110.27M	37.29M	64.60M	16.05M	-84.02M
Balance Sheet
Total Assets	3.87B	3.92B	1.63B	1.89B	1.89B	1.76B
Cash, Cash Equivalents and Short-Term Investments	184.34M	168.69M	213.77M	393.61M	293.58M	154.09M
Total Debt	2.14B	2.16B	567.74M	569.49M	554.85M	785.30M
Total Liabilities	2.57B	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	25.53M	26.48M	135.12M	184.24M	124.88M	34.53M
Operating Cash Flow	14.64M	28.20M	162.82M	212.77M	148.68M	52.24M
Investing Cash Flow	-1.66B	-1.65B	-66.85M	-48.60M	-72.43M	-17.61M
Financing Cash Flow	1.56B	1.58B	-273.56M	-59.15M	63.85M	36.68M

First Advantage Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 14.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FA, the sentiment is Negative. The current price of 14.16 is below the 20-day moving average (MA) of 15.09, below the 50-day MA of 15.81, and below the 200-day MA of 16.47, indicating a bearish trend. The MACD of -0.39 indicates Positive momentum. The RSI at 38.85 is Neutral, neither overbought nor oversold. The STOCH value of 16.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FA.

First Advantage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	74 Outperform	$2.81B	19.34	7.15%	0.88%	4.18%	18.93%
ABM	70 Outperform	$2.72B	24.15	6.32%	2.36%	4.27%	-24.06%
LZ	66 Neutral	$1.73B	61.57	22.58%	―	4.19%	48.69%
CBZ	65 Neutral	$2.88B	30.73	7.84%	―	46.49%	-25.62%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BV	59 Neutral	$1.22B	384.48	3.03%	―	-2.99%	-72.13%
FA	49 Neutral	$2.48B	549.40	-13.57%	―	65.34%	-633.72%

First Advantage Corporate Events

First Advantage Reduces Interest Rates on Credit Facilities

On July 30, 2025, First Advantage Holdings, LLC, a subsidiary of First Advantage Corporation, executed Amendment No. 5 to its first lien credit agreement originally dated January 31, 2020. The amendment reduced the interest rates on both the term loan facility due in 2031 and the $250 million revolving credit facility due in 2029 by 0.50%, potentially lowering borrowing costs and improving financial flexibility for the company.

First Advantage Holds 2025 Annual Stockholders Meeting

On June 6, 2025, First Advantage Corporation held its 2025 Annual Meeting of Stockholders, where approximately 96% of the shares entitled to vote were represented. During the meeting, stockholders elected Class I directors for a three-year term, ratified Deloitte & Touche LLP as the independent public accounting firm for 2025, and approved the compensation of named executive officers on a non-binding basis.