I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSV). 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. 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.
When I was updating my spreadsheet, I noticed Net Insider Selling was high at 2.2%. Generally, NIS is around 0.01%. It seems the Chairman and Founder was the insider selling. In the prior two years, NIS was at 0.015 and 0.02%, respectively. The other thing is that the stock price has really taken off. The capital gain over the past 5 years is 43.9% per year. This is high.
The company started to pay dividends in 2013. The dividends are paid in US$ and the yield has been low. The current dividend yield is just 0.71%. The 4 year median is 1.16%. The 4 year high is 2% and the low is 0.66%. The dividend growth is also low, with 4 year growth at 4.5% per year.
They can afford their dividends. The Dividend Payout Ratio for 2017 was 33% with 4 year coverage at 53%. The DPR for CFPS for 2017 is 145 with 4 year coverage at 16%.
The Debt Ratios on this company are generally good. The Long Term Debt/Market Cap Ratio for 2017 is low and good at just 0.11. For 2017 the Liquidity Ratio is 1.57 and the Debt Ratio is 1.62. These are good as I like them to be 1.50 or higher. The Leverage and Debt/Equity Ratio are fine at 2.61 and 1.61 respectively.
The Total Return per year is shown below for years of 5 to 22 to the end of 2017 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
The same total return if done to date is not much different except for the 5 and 10 year period where total returns are 34.08% and 28.89% per year respectively rather than 46.03% and 23.52% per year in the table below. So, the 5 year total return is lower and the 10 year total return is higher.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 8.93% | 46.03% | 43.95% | 2.08% |
| 10 | 23.52% | 22.85% | 0.68% | |
| 15 | 22.71% | 22.27% | 0.44% | |
| 20 | 16.27% | 16.00% | 0.27% | |
| 22 | 22.20% | 21.90% | 0.30% |
The Total Return per year is show below for years of 5 to 22 to the end of 2017 in US$. It is the same here where the 5 and 10 year total returns are different to date at 29.49% and 28.22% per year respectively rather than the ones of the table below of 38.735 and 20.29% per year respectively. As for CDN$, the 5 year total return is lower and the 10 year total return is higher.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 4.53% | 38.73% | 37.32% | 1.41% |
| 10 | 20.29% | 19.83% | 0.45% | |
| 15 | 23.89% | 23.56% | 0.33% | |
| 20 | 16.94% | 16.73% | 0.21% | |
| 22 | 22.59% | 22.37% | 0.22% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 32.23, 42.62 and 50.41. The corresponding 10 year ratios are 21.01, 24.47 and 32.80. The historical ratios are 13.70, 18.48 and 23.12. The current ratio is 37.22 based on a stock price of $94.54 and 2018 EPS estimate of $2.84. These are all in CDN$. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $23.30 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 2.21, 3.02 and 3.93 in CDN$. The current P/GP Ratio is 4.24 based on a stock price of $94.54 CDN$. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 8.88 CDN$. The current P/B Ratio is 10.86 CDN$ based on a stock price of $94.54 CDN$, Book Value of $313M CDN$ and Book Value per share of $8.70 CDN$. The current ratio is 22% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of`1.16% CDN$. The current dividend yield is 0.76% based on dividends of $0.72 CDN$ and a stock price of $94.54. The current yield is some 34% lower. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.47 CDN$. The current ratio is 1.36 based on 2018 Revenue estimate of $2,493M, Revenue per share of $69.30 and a stock price of $94.54, all in CDN$. The current ratio is some 188% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
The very high P/E Ratio for the past 5 years show that the stock price has gone up much quicker than the EPS. The 5 and 10 year median ratios are more rational. The P/GP Ratios are also quite high considering that a good price on an absolute basis is a P/GP Ratio of 1.00. The P/B Ratio is extremely high at 8.88. The only reasonable ratio I see is the 10 year P/S Ratio at 0.47. Even with most median ratios being high, all the stock price testing shows the stock to be relatively expensive.
When I look at analysts’ recommendations, I find Hold (4) Recommendations. These are the only ones. The 12 month consensus stock price is $104.00. This implies a total return of 10.77% with 10.01% from capital gains and 0.76% from dividends.
Darrell McKinsey on Fairfield Current talks about brokerage firms giving this stock a Hold rating. Lisa Matthews on Fairfield Current talks about hedge funds buying shares in the company. Will Ashworth on Motley Fool talks about why the company split into 2 entities. . See what analysts are saying on Stock Chase. They generally like this company.
FirstService Corp operates in two business divisions: FirstService Residential and FirstService Brands. 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 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 Wednesday, December 19, 2018 around 5 pm. Tomorrow on my other blog I will write about How to Make Money in Value Stocks.... learn more on Tuesday, December 18, 2018 around 5 pm.
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