Comparing First Advantage (NYSE:FA) and Alight (NYSE:ALIT)

First Advantage (NYSE:FA) and Alight (NYSE:ALIT) are both mid-cap business services companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Risk and Volatility

First Advantage has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Alight has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Insider & Institutional Ownership

94.9% of First Advantage shares are owned by institutional investors. Comparatively, 96.7% of Alight shares are owned by institutional investors. 5.3% of First Advantage shares are owned by company insiders. Comparatively, 5.3% of Alight shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Advantage	4.28%	14.12%	7.97%
Alight	-9.19%	5.14%	2.28%

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Advantage and Alight, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Advantage	0	2	4	0	2.67
Alight	0	0	9	0	3.00

First Advantage currently has a consensus target price of $18.00, suggesting a potential upside of 12.99%. Alight has a consensus target price of $11.61, suggesting a potential upside of 61.94%. Given Alight’s stronger consensus rating and higher possible upside, analysts clearly believe Alight is more favorable than First Advantage.

Valuation and Earnings

This table compares First Advantage and Alight’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Advantage	$763.76 million	3.03	$37.29 million	$0.22	72.41
Alight	$3.41 billion	1.18	-$345.00 million	($0.62)	-11.56

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

Summary

First Advantage beats Alight on 8 of the 14 factors compared between the two stocks.

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.

About Alight

Alight, Inc. provides cloud-based integrated digital human capital and business solutions worldwide. The company operates through two segments, Employer Solutions and Professional Services. The Employer Solutions segment offers employee wellbeing, integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, retiree healthcare and payroll; and operates AI-led capabilities software. The Professional Services segment offers consulting offerings, such as cloud advisory, deployment, and optimization services for cloud platforms. The company provides Alight Worklife, an intuitive, cloud-based employee engagement platform. Its solutions enable employees to enrich their health, wealth, and wellbeing that helps organizations achieve a high-performance culture. Alight, Inc. was founded in 2020 and is based in Lincolnshire, Illinois.