Is it a good company at a reasonable price? The stock price is probably expensive. The dividend yields are below 1%, so hardly a dividend stock. I generally do not buy stocks when the dividend yield is below 1%. Although sometimes these sorts of stocks can be good earnings for you when the dividends do rise above 1%.
I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSV). 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. The company started dividends in 2013.
When I was updating my spreadsheet, I noticed return over the last 10 year is high at 35.05% per year. See chart below. However, so far this year, the stock has fallen some 34%. It has a very low dividend yield (less than 1%) at 0.64%. The company has some very high ratios. P/E Ratios with 5 year and 10 year median ratios at 42.62 and 41.09. High P/E Ratios are probably between 20.00 and 30.00. The 10 year median P/B Ratio is 8.18 and a good one is around at 1.50.
If you had invested in this company in December 2011, for $1,010.51 you would have bought 74 shares at $13.66 per share. In December 2021, after 10 years you would have received $415.21 in dividends. The stock would be worth $18,396.40. Your total return would have been $18,811.61.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $13.66 | $1,051.10 | 74 | 10 | $415.21 | $18,396.40 | $18,811.61 |
The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 0.66%. The 5 and 8 year dividend yields are also low at 0.67% and 0.80%. The dividend growth is moderate (8% to 14% ranges) at 10.6% per year over the past 5 years. The last dividend increase was for 11% and it was in 2022.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 23.36% with 5 year coverage at 169%. The DPR for 2022 is expected to be around 30%. The DPR for Adjusted Earnings per Share (AEPS) is 16% with 5 year coverage at 20%. The DPR for Cash Flow per Share (CFPS) for 2021 is 12% with 5 year coverage at 14%. The DPR for Free Cash Flow (FCF) for 29% with 5 year coverage at 20%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is good at 0.07. The Liquidity Ratio for 2021 is good at 1.56. The Debt Ratio for 2021 is good at 1.68. The Leverage and Debt/Equity Ratios are fine at 2.46 and 1.46 respectively.
The Total Return per year is shown below for years of 5 to 26 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 9.36% | 32.07% | 31.29% | 0.78% |
| 2011 | 10 | 8.80% | 35.05% | 33.67% | 1.38% |
| 2006 | 15 | 20.47% | 20.01% | 0.46% | |
| 2001 | 20 | 18.42% | 18.11% | 0.31% | |
| 1996 | 25 | 21.82% | 21.53% | 0.29% | |
| 1995 | 26 | 23.37% | 23.06% | 0.30% |
The Total Return per year is shown below for years of 5 to 26 to the end of 2021 in 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 10.63% | 33.57% | 32.85% | 0.72% |
| 2011 | 10 | 7.48% | 31.66% | 30.78% | 0.87% |
| 2006 | 15 | 19.59% | 19.25% | 0.34% | |
| 2001 | 20 | 19.56% | 19.31% | 0.26% | |
| 1996 | 25 | 22.12% | 21.89% | 0.23% | |
| 1995 | 26 | 23.68% | 23.44% | 0.24% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 35.71, 42.22 and 49.83. The corresponding 10 year ratios are 32.73, 41.78 and 49.28. The corresponding historical ratios are 14.29, 18.53 and 23.55. The current P/E Ratio is 47.58 based on a stock price of $125.61 and EPS estimate for 2022 of $2.64. The current P/E Ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 23.94, 29.32 and 36.31. The corresponding 10 year ratios are 19.94, 28.10 and 34.38. The current P/AEPS Ratio is 29.91 based on a stock price of $125.61 and AEPS estimate for 2022 of $4.20. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
I get a Graham Price of $45.67 . The 10-year low, median, and high median Price/Graham Price Ratios are 2.75, 3.94 and 5.09. The current P/GP Ratio is 3.69 based on a stock price of $168.56. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 8.18. The current P/B Ratio is 6.34 based on a Book Value of $872M, Book Value per Share of $19.82 and a stock price of $125.61. The current ratio is 22% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I also have estimates for the Book Value per share for 2022. The estimate is $22.60 for the Book Value per Share. The P/B Ratio would be 5.56 based on this Book Value per Share, Book Value of $995M, and a stock price of $125.61. This P/B Ratio is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 14.62. The current P/CF Ratio is 22.80 based on Cash Flow per Share estimate for 2022 of $5.51, Cash Flow of $243M and a stock price of $125.61. The current ratio is 56% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get an historical median dividend yield of 0.80%. The current dividend yield is $0.64 based on dividends of $0.81 and a stock price of $125.61. The current dividend yield is 19.4% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
I get a 10 year median dividend yield also of 0.80%. The current dividend yield is $0.64 based on dividends of $0.81 and a stock price of $125.61. The current dividend yield is 19.4% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
The 10-year median Price/Sales (Revenue) Ratio is 1.15. The current P/S Ratio is 1.49 based on Revenue estimate for 2022 of $3,703M, Revenue per Share of $84.13 and a stock price of $125.61. The current ratio is 30% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
Results of stock price testing is that the stock price is probably expensive. The dividend yield testing says it is reasonable, but above the median. With a current yield 19.4% below the 10 year median, it is very close to expensive. The P/S Ratio test says the stock price is expensive. Some other testings are showing the stock price as reasonable, but some of this stock’s ratios are very high. For example, the 10 year ratios for P/E Ratio are 32.73, 41.78 and 49.28 and these are very high.
When I look at analysts’ recommendations, I find Strong Buy, (1), Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $174.37 CDN$ ($131.00 US$). This implies a total return of 4.09% with 3.45% from capital gains and 0.64% from dividends based on a stock price of $168.56 CDN$.
Analysts on Stock Chase says this stock is a Buy or their Top Pick. Stock Chase gives this stock 5 stars out of 5. It is not on the Money Sense list. Adam Othman on Motley Fool says this is a discounted real estate stock. Kay Ng on Motley Fool says this is REIT to buy for growth. The company put out a press release on Globe Newswire about their 2021 year end results. The company has a press release on Globe Newswire about it third quarter of 2022 results. Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has two warnings about this company of debt is not well covered by operating cash flow; and significant insider selling over the past 3 months.
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 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 23, 2022 around 5 pm. Tomorrow on my other blog I will write about Future Crunch.... learn more on Tuesday, November 22, 2022 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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