Comparing Advantage Solutions (NASDAQ:ADV) & First Advantage (NYSE:FA)

Advantage Solutions (NASDAQ:ADV) and First Advantage (NYSE:FA) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.

Volatility & Risk

Advantage Solutions has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500. Comparatively, First Advantage has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Insider & Institutional Ownership

49.8% of Advantage Solutions shares are held by institutional investors. Comparatively, 94.9% of First Advantage shares are held by institutional investors. 5.5% of Advantage Solutions shares are held by company insiders. Comparatively, 4.7% of First Advantage shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Advantage Solutions and First Advantage’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advantage Solutions	$4.22 billion	0.35	-$63.26 million	($0.20)	-22.75
First Advantage	$763.76 million	3.19	$37.29 million	$0.25	67.20

First Advantage has lower revenue, but higher earnings than Advantage Solutions. Advantage Solutions is trading at a lower price-to-earnings ratio than First Advantage, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Advantage Solutions and First Advantage’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advantage Solutions	-1.35%	-4.51%	-1.31%
First Advantage	4.88%	13.84%	7.96%

Analyst Recommendations

This is a breakdown of current recommendations for Advantage Solutions and First Advantage, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advantage Solutions	0	2	2	0	2.50
First Advantage	0	1	4	0	2.80

Advantage Solutions currently has a consensus target price of $3.43, indicating a potential downside of 24.54%. First Advantage has a consensus target price of $18.00, indicating a potential upside of 7.14%. Given First Advantage’s stronger consensus rating and higher possible upside, analysts plainly believe First Advantage is more favorable than Advantage Solutions.

Summary

First Advantage beats Advantage Solutions on 11 of the 14 factors compared between the two stocks.

About Advantage Solutions

Advantage Solutions Inc. provides business solutions to consumer goods manufacturers and retailers in North America and internationally. It operates in two segments, Sales and Marketing. The Sales segment offers brand-centric services, such as headquarter relationship management; analytics, insights, and intelligence; and brand-centric merchandising services. This segment also provides retailer-centric services comprising retailer-centric merchandising and in-store media services. The Marketing segment offers brand-centric services, including shopper and consumer marketing, and brand experiential services; retailer-centric services, such as retail experiential and private label services; and digital marketing, and digital media and advertising services. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016. The company was founded in 1987 and is headquartered in Irvine, California.

About First Advantage

First Advantage Corporation provides employment background screening, identity, and verification solutions worldwide. It offers pre-onboarding products and solutions, such as criminal background checks, drug/health screening, extended workforce screening, FBI channeling, identity checks and biometric fraud mitigation tools, education/work history verification, driver records and compliance, healthcare credentials, executive screening, and other screening products. The company also provides post-onboarding solutions, including criminal records monitoring, healthcare sanctions, motor vehicle records, social media screening, and global sanctions and licenses; and other products comprising fleet/vehicle compliance, hiring tax credits and incentives, resident/tenant screening, and investigative research. Its products and solutions are used by personnel in recruiting, human resources, risk, compliance, vendor management, safety, and/or security in global enterprises, mid-sized, and small companies. The company was formerly known as Fastball Intermediate, Inc. and changed its name to First Advantage Corporation in March 2021. First Advantage Corporation was founded in 2002 and is based in Atlanta, Georgia.