Is First Advantage Corp. overvalued or undervalued?

As of 27 February 2025, the valuation grade for First Advantage Corp. has moved from fair to risky, indicating a significant deterioration in its financial outlook. The company is currently considered overvalued, particularly given its P/E ratio is not applicable due to losses, while its Price to Book Value stands at 2.47 and its EV to EBITDA is at 21.01. The Return on Capital Employed (ROCE) is notably low at 2.04%, and the Return on Equity (ROE) is negative at -2.31%, further highlighting the company's financial struggles.
In comparison to its peers, First Advantage Corp. shows a stark contrast with Laureate Education, Inc., which is rated attractive with a P/E of 15.34 and an EV to EBITDA of 9.85, and ICF International, Inc., which is rated fair with a P/E of 16.67 and an EV to EBITDA of 10.99. The company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -10.57% compared to the index's 2.44%, reinforcing the perception of overvaluation amidst its financial challenges.