First Advantage Corporation Just Recorded A 36% EPS Beat: Here's What Analysts Are Forecasting Next
As you might know, First Advantage Corporation (NASDAQ:FA) just kicked off its latest annual results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 4.1% to hit US$712m. First Advantage also reported a statutory profit of US$0.11, which was an impressive 36% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for First Advantage
Taking into account the latest results, the consensus forecast from First Advantage's seven analysts is for revenues of US$825.3m in 2022, which would reflect a decent 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 249% to US$0.37. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$755.1m and earnings per share (EPS) of US$0.29 in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for First Advantage 5.0% to US$27.38on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic First Advantage analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$22.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that First Advantage's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 40% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% annually. So it's pretty clear that, while First Advantage's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards First Advantage following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for First Advantage going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for First Advantage that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
