Is First Advantage Corp. overvalued or undervalued?

As of 27 February 2025, the valuation grade for First Advantage Corp. has moved from expensive to risky, indicating a deterioration in its valuation outlook. The company appears to be overvalued given its current financial metrics, particularly with a Price to Book Value of 2.47 and an EV to Sales ratio of 4.90, which are significantly higher than some peers. Notably, its EV to EBITDA ratio stands at 21.01, which is also elevated compared to competitors like Laureate Education, Inc. with an EV to EBITDA of 11.4680 and Payoneer Global, Inc. at 10.3286.
In terms of performance, First Advantage Corp. has underperformed against the S&P 500 across multiple time frames, with a year-to-date return of -16.39% compared to the S&P 500's 12.22%. This trend reinforces the notion that the stock is overvalued, particularly as it struggles to generate positive returns while its peers demonstrate more favorable valuation ratios and performance metrics.