FA
First Advantage Corporation
$22.35
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 95.3% above fair value
You pay
$22.35
Bear
$3.33
Fair
$11.44
Bull
$20.28
Bear
$3.33
-85.1%
8% stage 1 growth, 11% discount
Fair
$11.44
-48.8%
14% stage 1 growth, 11% discount
Bull
$20.28
-9.3%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
46.4x
Market is pricing in (growth)
20.2%
vs 14.1% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $16.50 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $11.44 per share.
Warnings
Wall Street's average price target is $16.50 (from 12 analysts). Our estimate is 38% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions