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 looked like a good solid company that knows how to make money. By 2010 the company was underperforming so I sold the stock and kept the preferred shares until the end of the year before selling them too. Preferred shares are not by favorite why of getting dividends.
When I was updating my spreadsheet, I noticed even though the company reports in US$, analysts insist and site insist on doing estimates in CDN$. However, this year I had a hard time getting any estimates at all. Last year I at least got estimates for the following 3 years.
They started to pay dividends 5 years ago. The dividends are paid in US$. This company also reports in US$. The dividend yield is in the low category (under 2%). The current dividend yield is 0.65%. The 5 year median dividend is 1.00%. The 5 year growth rate is low at 5.69%, however this is because they did not increase the dividends at first. However, the last 3 increases have been over 10% with the latest dividend increase in 2019 at 11.1%.
The Dividend Payout Ratios are good. The DPR for EPS for 2018 is 29% with 5 year coverage at 42%. The CPR for CFPS for 2018 is 13% with 5 year coverage at 16%. The DPR for FCF for 2018 is 32% with 5 yar coverage at 19%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is 0.13. The Liquidity Ratio for 2018 is 1.83 with 5 year median at 1.66. The Debt Ratio for 2018 is 1.63 with 5 year median at 1.62. Leverage and Debt/Equity Ratios for 2018 are 2.60 and 1.60 with 5 year median at 3.04 and 2.04.
The Total Return per year is shown below for years of 5 to 23 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 9.36% | 33.85% | 32.22% | 1.63% |
| 2008 | 10 | 28.79% | 27.73% | 1.05% | |
| 2003 | 15 | 18.57% | 18.07% | 0.50% | |
| 1998 | 20 | 16.12% | 15.78% | 0.35% | |
| 1995 | 23 | 21.55% | 21.19% | 0.36% |
The Total Return per year is shown below for years of 5 to 23 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 5.69% | 27.04% | 25.71% | 1.33% |
| 2008 | 10 | 27.02% | 26.24% | 0.78% | |
| 2003 | 15 | 18.16% | 17.76% | 0.40% | |
| 1998 | 20 | 16.67% | 16.38% | 0.29% | |
| 1995 | 23 | 21.48% | 21.19% | 0.29% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 32.48, 42.62 and 50.41. The corresponding 10 year ratios are 31.11, 39.56 and 46.76. The corresponding historical ratios are 13.99, 18.67 and 23.23. The current P/E Ratio is 29.23 based on a stock price of $119.93 and 2019 EPS estimate of $4.10 ($3.10 US$). This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
The P/E Ratio for 2020 is 26.97 based on a stock price of $119.93 and 2020 EPS estimate of $4.45 ($3.36 US$). This stock price testing suggests that the stock price is relatively cheap. This is in CDN$. All the P/E Ratio is extremely high with the exception of the historical ratios.
The high capital gains for the past 5 and 10 years started with negative P/E Ratios. The 15, 20 and 23 year capital gains started from P/E Ratios of 19.62, 21.24 and 10.35. These are closer in line with the historical median P/E Ratios.
I get a Graham Price of $26.75. The 10 year low, median, and high median Price/Graham Price Ratios are 2.57, 3.22 and 4.06. The current P/GP ratio is 4.48 based on a stock price of $119.93. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 8.88. The current P/B Ratio is 15.70 based on a Book Value of $230M, Book Value per Share of $6.57 and a stock price of $91.94. The current ratio is 77% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 1.00%. The current yield is 0.65% based on dividends of $0.60 and a stock price of $91.94. The current ratio is 35% below the historical yield. This stock price testing suggests that the stock price is relatively expensive. This is in US$. Note that this is also the 5 year median dividend yield. You will get a similar result in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.59. The current P/S Ratio is 1.50 based on 2019 Revenue estimate of $2,400M, Revenue per Share of $61.16 and a stock price of $91.94. The current ratio is 157% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive. This is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably expensive. Some of the 10 year ratios are extremely high. This is true of the P/E Ratios, P/GP Ratios, and the P/B Ratios. Most of this testing is still showing the current stock price is relatively expensive. The best test is probably the P/S Ratio test, but there is nothing wrong with the P/B Ratio test or the P/GP Ratio test.
Is it a good company at a reasonable price? I think that the current price is probably expensive. It is a good company, but I do not buy companies when their dividend yields are below 1%. Five years ago, the yields were above 1%. A positive is the nice dividend increases lately with the one for 2019 at 11.1%. Shareholders have done well with capital gains but these gains have started from P/E Ratios that were negative or much lower than for the median P/E Ratios of the 5 and 10 year durations.
When I look at analysts’ recommendations, I find only Hold (5) recommendations. The 12 month stock price is $103.00 US$ (or $136.22 CDN$). This implies a total return of 12.68% with 12.03% from capital gains and 0.65% from dividends.
See what analysts are saying on Stock Chase . They like the company and say it is growing organically as well as by acquisition. Will Ashworth on Motley Fool talks about the company doing away with its dual-class structure. A writer on Simply Wall Street thinks that the company is overpriced. A writer on Simply Wall Street says the stock’s current price reflects it optimistic future. Steph Klass on Mitchell Messenger talks about recent analysts recommendations.
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 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 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 Monday, December 16, 2019 around 5 pm.
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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