FirstService Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Real Estate. It would seem at the present time that the stock price is relatively expensive. There is a wide gap between the ROE on Net Income and Comprehensive Income. See my spreadsheet on FirstService Corp.

I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSV), but I used to. I bought FirstService Corp in 2002 as I thought it was a good solid company that knows how to make money. 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.

A curious thing is that the estimates for future years were given in CDN$ and this company reports in US$. Other years future estimates were in US$. All the financial reports are in US$ including the most recent one for the third quarter of 2017.

The company started to pay dividends in 2013 and they are paid in US$. The dividends were flat from 2013 to 2015 inclusive. They raised the dividends by 10% in 2016 and then by 11.4% in 2017. They can afford their dividends as the Dividend Payout Ratio for 2016 was 47%. It is expected to be 33% in 2017 with 5 year coverage of 53%. The Dividend Payout Ratio for CFPS was 16.5% in 2016. It is expected to be 16% in 2017 with 5 year coverage at 16%.

The dividend yield is very low. The high dividend yield was 2% and the low is 0.7%. The current dividend yield is 0.72% based on a stock price of $67.87 US$ and dividends of $0.49 US$

The 5 year low, median and high median Price/Earnings per Share Ratios are 29.99, 39.55 and 46.87 CDN$. The 10 year ratios are 17.78, 24.96 and 32.14 CDN$. The historical ones are 12.87, 18.35 and 22.63 CDN$. The current P/E Ratio is 47.49 CDN$ based on a stock price of $87.39 CDN$, EPS estimate for 2017 of $1.84 CDN$. The 2018 P/E Ratio is 39.01 CDN$ based on a stock price of $87.39 CDN$ and EPS for 2018 of $2.24 CDN$. Results in US$ would be similar. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price $16.99 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 1.98, 2.83 and 3.52 CDN$. The current P/GP Ratio is 5.14 CDN$ based on a stock price of $87.39 CDN$. All of the P/GP Ratios are quite high. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 8.31 CDN$. The current P/B Ratio is 12.53 CDN$ based on a stock price of $87.39 CDN$, Book Value of $250.4M CDN$ and Book Value per Share of $6.98 CDN$. The current P/B Ratio is some 51% higher than the 10 year median ratio. Results in US$ would be similar. This stock price testing suggests that the stock price is relatively expensive.

The historical median dividend yield is 1.34%. The current dividend yield is $0.72% based on a stock price of $87.39 CDN$ and dividends of $0.63 CDN$. The current yield is some 46% lower than the historical one. (I use historical loosely as we only have a few years of data.) Results in US$ would be similar. This stock price testing suggests that the stock price is relatively expensive.

I get a Price/Sales (Revenue) Ratio of 0.48 US$. The current P/S Ratio is 1.45 US$ based on 2017 Revenue estimate of $1,648M, Revenue per Share of $46.77 US$ and a stock price of $67.87 US$. The current ratio is some 200% above the 10 year ratio. Results in CDN$ would be similar. This stock price testing suggests that the stock price is relatively expensive.

A negative about this stock is that the Return on Equity on the Net Income is a lot higher than the Return on Equity on Comprehensive Income. The ROE on Net Income for 2016 is 18.6% with 5 year median of 12.8%. The ROE on Comprehensive Income for 2016 is 12% with a 5 year median of just 3.1%. This would suggest that the earnings maybe not be of good quality. (This is the same in either currency.)

When I look at analysts' recommendations, I find only Hold (6) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $89.29 CDN$. This implies a total return of 2.89% with 2.17% from capital gains and 0.72% from dividends based on a current stock price of $87.39 CDN$.

David Owens on Simply Wall Street thinks that this stock is overvalued (that is the current price is too high). Jennifer Salazar on Ledger Gazette talks about a director selling shares and recent analysts' recommendations. See what analysts are saying about this company on Stock Chase. They are rather positive about the company.

FirstService Corporation is a North American leader in the property services sector, serving its customers through two industry-leading service platforms: FirstService Residential, North America's largest manager of residential communities; and FirstService Brands, one of North America's largest providers of essential property services delivered through individually branded franchise systems and company-owned operations. Its web site is here FirstService Corp.

The last stock I wrote about was about was Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF)... learn more. The next stock I will write about will be Stantec Inc. (TSX-STN, NYSE-STN)... learn more on Friday, December 22, 2017 around 5 pm. Tomorrow on my other blog I will write about Start Investing.... learn more on Thursday, December 21, 2017 around 5 pm.

Also, on my book blog I have put a review of the book Money Changes Everything by William Goetzmann learn more...

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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