Shareholders might have noticed that First Advantage Corporation (NASDAQ:FA) filed its quarterly result this time last week. The early response was not positive, with shares down 4.8% to US$15.99 in the past week. Revenues came in at US$169m, in line with estimates, while First Advantage reported a statutory loss of US$0.02 per share, well short of prior analyst forecasts for a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the current consensus from First Advantage's nine analysts is for revenues of US$782.7m in 2024. This would reflect a modest 3.3% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 46% to US$0.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$782.5m and earnings per share (EPS) of US$0.30 in 2024. So the consensus seems to have become somewhat more optimistic on First Advantage's earnings potential following these results.

There's been no major changes to the consensus price target of US$18.08, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on First Advantage, with the most bullish analyst valuing it at US$21.00 and the most bearish at US$15.50 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that First Advantage's revenue growth is expected to slow, with the forecast 4.4% annualised growth rate until the end of 2024 being well below the historical 8.7% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that First Advantage is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around First Advantage's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that First Advantage's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple First Advantage analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - First Advantage has 1 warning sign we think 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.