FirstService Corp

I am reviewing this stock (TSX-FSV) today as the annual reported for December 2009 has been published and I own some of this stock. I first bought this stock in June of 2002, when I was diversifying my portfolio into Real Estate stock. It is not a dividend paying stock, but I kept it because in August 2007, it issued to shareholders Preferred Shares with a 7% yield. However, on my original investment, I am making a dividend yield of just 1.16%.

For this stock, all the growth figures, except for total return, are good. This is a real estate stock, so its price is depressed. The 5 and 10 year growth for total return is -2.6% and 9.8%. The 10 year return is good. It is just the 5 year one that is not. The 5 and 10 year growth in revenue per share is 13% and 12% per year, respectively. The 5 and 10 year growth in Cash Flow is 18.6% and 14.3% per year, respectively. The revenue growth and cash flow growth is important for any company when you are looking for an investment.

Although this company lost money in 2009, it is giving an adjusted earnings figures of $1.49, as this is what it earned on its continuing business. The earnings loss for 2009 lowers their Return on Equity 5 year average to 9.4%, from their previous averages, which were all over 15%. The Liquidity Ratio and the Asset/Liability Ratio are not great. They are 1.19 and 1.49 respectively. The assets can cover the liabilities, but I would prefer both these ratios to be 1.50. The Asset/Liability Ratio almost makes this.

Because the Adjusted earnings are not the true earnings, I have put it into the uncertain purple colour. I have also done this for the number of shares outstanding and book value, both of which I was unsure of. The problem is that I am working off of unaudited statements published in a news bulletin, rather than the real annual statements.

The last thing to mention is that I will probably sell these shares. It is not a really dividend paying company and I would rather put my money into a dividend paying stock. I will probably look for a good time to sell and may only sell the stock and not the preferred shares. The preferred shares have a good return of over 7%, but they can be recalled at anytime and this might just happen. On Monday, I will review what the analysts say about this stock.

This company is a global diversified leader in the rapidly growing real estate services sector, providing services in the following three areas: commercial real estate, residential property management, and property services. This is an international company, having business in North and South America, Europe, Asia, Australia and New Zealand. Controlling shareholder is Jay Hennick. He has 9% holding, but has 52.5% voting control. Its web site is www.firstservice.com/. See my spreadsheet at www.spbrunner.com/stocks/fsv.htm .

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.