Is it a good company at a reasonable price? There is no doubt that this company is growing and has given shareholders a good return. However, the dividend is so low, I wonder about calling it a dividend growth stock. At the current rate of dividend growth of 10.03%, in 15 years’ time the dividend would be only at 2.50% of today’s stock price. From the testing I have done, it would seem that the stock price is on the expensive side.
I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSV), but I used to. I bought FirstService Corp in 2002 as it a good solid company that knows how to make money. At that time, I was still buying companies to earn capital gains. This one replaces Inco (which I had brought for Capital Gain and sold when I made them.) I bought more of this company in 2007 from my profit from RIM. FSV was a non-dividend paying stock, but it had issued preferred shares to shareholders.
Their way of paying dividends by issuing preferred shares was interesting. However, only if you held shares at the time of the special dividend of preferred shares would you get any dividends. However, they did start to pay dividends in 2013.
When I was updating my spreadsheet, I noticed this stock is still growing nicely. In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth US$ | 124.42% | 17.55% | 13.76% | <-12 mths |
| 5 | AEPS Growth | 78.54% | 12.29% | 2.15% | <-12 mths |
| 5 | Net Income Growth | 52.42% | 8.79% | 7.74% | <-12 mths |
| 5 | Cash Flow Growth | 181.88% | 23.03% | 10.36% | <-12 mths |
| 5 | Dividend Growth | 66.35% | 10.71% | 11.11% | <-12 mths |
| 5 | Stock Price Growth | 136.70% | 18.81% | 16.02% | <-12 mths |
| 10 | Revenue Growth US$ | 265.01% | 13.82% | 19.48% | <-this year |
| 10 | AEPS Growth | 331.77% | 15.75% | 7.94% | <-this year |
| 10 | Net Income Growth | 1035.22% | 27.50% | 41.15% | <-this year |
| 10 | Cash Flow Growth | 375.85% | 16.88% | -20.82% | <-this year |
| 10 | Dividend Growth | 119.38% | 8.17% | 12.82% | <-this year |
| 10 | Stock Price Growth | 643.07% | 22.21% | 16.02% | <-this year |
If you had invested in this company in December 2013, for $1,019.99 you would have bought 44 shares at $23.18 per share. In December 2023, after 10 years you would have received $335.67 in dividends. The stock would be worth $9,444.60. Your total return would have been $9,780.27. This would be a total return of 26.31% per year with 24.93% from capital gain and 1.38% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $23.18 | $1,019.99 | 44 | 10 | $335.67 | $9,444.60 | $9,780.27 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at a very low rate of 0.53%. The 5, 10 and historical dividend yields are also low at 0.61%, 0.68% and 0.69%. The dividend growth is moderate (8% to 14% per year) at 10.7% per year over the past 5 years. The last dividend increase was for 11% and it occurred in 2024. Dividends are paid in US$.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 39% with 5 year coverage too high at 105%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 19% with 5 year coverage at 18%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 14%. The DPR for 2023 for Free Cash Flow (FCF) is good at 21% with 5 year coverage at 18%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 39.17% | 104.64% |
| AEPS | 18.83% | 18.24% |
| CFPS | 13.51% | 14.05% |
| FCF | 20.64% | 18.44% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.16 and currently at 0.15. The Liquidity Ratio for 2023 is good at 1.77 and 1.81 currently. The Debt Ratio for 2023 is good at 1.77 and 1.81 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.39 and 0.39 and currently fine at 2.61 and 1.61.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.16 | 0.15 |
| Intang/GW | 0.25 | 0.25 |
| Liquidity | 1.77 | 1.81 |
| Liq. + CF | 2.13 | 2.12 |
| Debt Ratio | 1.77 | 1.81 |
| Leverage | 1.39 | 2.61 |
| D/E Ratio | 0.39 | 1.61 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 10.03% | 18.82% | 18.03% | 0.78% |
| 2013 | 10 | 9.70% | 26.31% | 24.93% | 1.38% |
| 2008 | 15 | 25.55% | 24.42% | 1.13% | |
| 2003 | 20 | 18.63% | 18.06% | 0.57% | |
| 1998 | 25 | 16.63% | 16.22% | 0.41% | |
| 1995 | 28 | 21.09% | 20.62% | 0.47% |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023 US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 10.71% | 19.55% | 18.81% | 0.74% |
| 2013 | 10 | 8.17% | 23.32% | 22.21% | 1.11% |
| 2008 | 15 | 24.58% | 23.71% | 0.87% | |
| 2003 | 20 | 18.49% | 18.02% | 0.47% | |
| 1998 | 25 | 17.22% | 16.86% | 0.35% | |
| 1995 | 28 | 21.15% | 20.76% | 0.39% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 39.57, 53.04, and 65.78. The corresponding 10 year ratios are 33.91, 49.10 and 60.61. The corresponding historical ratios are 14.38, 18.90 and 24.11. The current P/E Ratio is 58.57 based on a stock price of $258.58 and EPS estimate for 2024 of $4.42. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 26.47, 30.95 and 41.68. The corresponding 10 year ratios are 22.98, 29.22 and 35.61. The current P/AEPS Ratio is 36.68 based on a stock price of $184.48 and AEPS estimate for 2024 of $5.03. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a Graham Price of $75.94. The 10-year low, median, and high median Price/Graham Price Ratios are 2.55, 3.23 and 4.09. The current ratio is 3.41 based on a stock price of $258.58. The current ratio is between the median and high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 8.03. The current P/B Ratio is 7.18 based on a Book Value of $1,1489M, Book Value per Share of 25.70 and a stock price of $184.48. The current ratio is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2024 of $26.21. This implies a ratio of 7.04 based on a stock price of $184.48 and a Book Value of $1,171. This ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 20.80. The current P/CF Ratio is 31.14 based on Cash Flow per Share estimate for 2024 of $5.92, Cash Flow of $264.7M and a stock price of $184.48. The current ratio is 50% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 0.69%. The current dividend yield is 0.54% based on a stock price of $184.48 and dividends of $1.00. The current dividend yield is 21% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 0.68%. The current dividend yield is 0.54% based on a stock price of $184.48 and dividends of $1.00. The current dividend yield is 20.8% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 1.45. The current P/S Ratio is 1.59 based on Revenue estimate for 2024 of $5,179M, Revenue per Share of $115.91 and a stock price of $184.48. The current ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests say this. The P/S Ratio test says it is reasonable but above the median. Most of the testing is saying that the stock price is relatively expensive or reasonable but above the median. The only exception is the P/B Ratio test and that test says the stock price is reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (3) and Hold (3). The consensus would be a Buy. The 12 month stock price of $283.11 ($201.09 US$) with a high of $283.11 ($201.09 US$) and low of $283.11 (201.09 US$). It looks like only one future stock price given. The consensus stock price of $283.11 implies a total return of 9.49% all from capital gains.
Not all analysts on Stock Chase think the stock is a buy, but they do like the company. Stock Chase gives this stock 3 stars out of 5. Adam Othman on Motley Fool thinks this is a smart growth stock to buy. Kay Ng on Motley Fool thinks that this stock will deliver nice returns over the next few years. The company put out a press release on Global Newswire about their fourth quarter of 2023. The company put out a press release via Global Newswire about their second quarter of 2024.
Simply Wall Street via Yahoo Finance talk about this company’s latest quarter. Simply Wall Street has two warnings of has a high level of debt; and significant insider selling over the past 3 months. Simply Wall Street gives this stock 2 and one half stars out of 5.
FirstService Corp operates in two business divisions: FirstService Residential and FirstService Brands. FirstService Residential has service contracts to manage thousands of residential communities. FirstService Brands generates most of the company's revenue and provides property services to residential and commercial customers. The company earns the majority of its revenue in the United States, with the remaining revenue generated in Canada. Its web site is here FirstService Corp.
The last stock I wrote about was about was Northland Power Inc (TSX-NPI, OTC-NPIFF) ... learn more. The next stock I will write about will be First Capital REIT (TSX-FCR.UN, OTC-FCXXF) ... learn more on Wednesday, November 20, 2024 around 5 pm. Tomorrow on my other blog I will write about Luxury Beliefs .... learn more on Tuesday, November 19, 2024 around 5 pm.
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