Is it a good company at a reasonable price? I am not interested in this stock because of the very low dividends. I do not buy stocks with dividends below 1%. With dividend so low, it is not really a dividend stock. See chart below. If dividends continue to increase at the current 5 year rate of 12.3%, then in 15 years’ time, the dividend would only be just over 3%. At the moment, it would seem that the stock price is expensive. I know that the analysts are giving this stock a strong buy but this makes no sense if the 12 months stock price implies a total return over the next 12 months of 1.5%. Although I must admit that shareholders have done well with this stock in the past. See 10 year total return below.
| Div Yd | Years | At IRR | Div Inc |
|---|---|---|---|
| 1.04% | 5 | 12.30% | 78.62% |
| 1.86% | 10 | 12.30% | 219.05% |
| 3.32% | 15 | 12.30% | 469.89% |
| 5.92% | 20 | 12.30% | 917.93% |
| 10.58% | 25 | 12.30% | 1718.23% |
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.
When I was updating my spreadsheet, I noticed dividend estimates for 2022-2024 were $0.87, $0.94, and $1.25 US$ and Dividends estimates for 2023-2025 were $0.88, $0.97, $1.03. So, dividend estimates for 2024 went from 1.25 to $0.97 and for 2025 it is lower at $1.03.
If you had invested in this company in December 2012, for $1,010.20 you would have bought 71 shares at $14.23 per share. In December 2022, after 10 years you would have received $474.35 in dividends. The stock would be worth $11,772.51. Your total return would have been $12,246.86. This is a total return would be a total return of 29.73% per year with 27.83% from capital gain and 1.89% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.23 | $1,010.20 | 71 | 10 | $474.35 | $11,772.51 | $12,246.86 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at just 0.63%. The 5, 9 and historical dividend yields are low at 0.60%, 0.74% and 0.74%. The dividend increases are good with dividends increasing at 12.3% per year over the past 5 years. The last dividend increase was for 11.1% and it occurred in 2023.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 29% with 5 year coverage at 108%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 19% with 5 year coverage at 19%. The DPR for 2022 for Cash Flow per Share (CFPS) is 12% with 5 year coverage at 14%. The DPR for 2022 for Free Cash Flow (FCF) is 111% with 5 year coverage at 25%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 29.04% | 108.31% |
| AEPS | 18.63% | 18.52% |
| CFPS | 12.44% | 13.94% |
| FCF | 111.45% | 24.61% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.13. The Liquidity Ratio for 2022 is good at 1.74 and 1.84 currently. The Debt Ratio for 2022 is good at 1.74 and currently at 1.84. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.43 and 1.43 and are currently good at 2.38 and 1.38.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.13 | 0.12 |
| Intang/GW | 0.23 | 0.22 |
| Liquidity | 1.74 | 1.84 |
| Liq. + CF | 1.91 | 2.24 |
| Debt Ratio | 1.74 | 1.84 |
| Leverage | 2.43 | 2.38 |
| D/E Ratio | 1.43 | 1.38 |
The Total Return per year is shown below for years of 5 to 27 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 12.30% | 14.34% | 13.53% | 0.81% |
| 2012 | 10 | 9.83% | 29.73% | 27.83% | 1.89% |
| 2007 | 15 | 20.52% | 19.66% | 0.86% | |
| 2002 | 20 | 20.68% | 20.03% | 0.65% | |
| 1997 | 25 | 15.91% | 15.50% | 0.41% | |
| 1995 | 27 | 20.79% | 20.30% | 0.49% |
The Total Return per year is shown below for years of 5 to 27 to the end of 2022 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 | 10.59% | 12.62% | 11.88% | 0.74% |
| 2011 | 10 | 7.86% | 25.31% | 23.95% | 1.37% |
| 2006 | 15 | 17.75% | 17.12% | 0.63% | |
| 2001 | 20 | 21.09% | 20.53% | 0.56% | |
| 1996 | 25 | 16.10% | 15.75% | 0.35% | |
| 1995 | 27 | 20.76% | 20.36% | 0.41% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 32.98, 52.44 and 65.30. The corresponding 10 year ratios are 32.73, 45.18 and 53.16. The corresponding historical ratios are 14.33, 18.88 and 23.72. The current P/E Ratio is 55.42 based on a stock price of $212.19 and EPS estimate for 2023 of $3.83 ($2.79 US$). The current ratio is higher than the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive. The ratios for this stock are very high. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 24.63, 29.32 and 41.68. The corresponding 10 year ratios are 21.25, 29.02 and 35.48. The current P/AEPS Ratio is 32.75 based on AEPS estimate for 2023 of $4.72 and a stock price of $154.59. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$.
I get a Graham Price of $52.14. The 10-year low, median, and high median Price/Graham Price Ratios are 3.16, 4.19 and 5.19. The current P/GP Ratio is 4.07 based on a stock price $212.19. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$. Also, these ratios are very high. Generally, a high ratio is considered to be around 1.20.
I get a 10-year median Price/Book Value per Share Ratio of 8.03. The current P/B Ratio is 6.72 based on a stock price of $154.59, Book Value of $1,017M and Book Value per Share of $23.00. The current P/B Ratio is 16% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get similar results in CDN$.
I also have a Book Value per Share estimate for 2023 of $23.30. This implies a P/B Ratio of 6.63 based on a stock price of $154.59 and a Book Value of $1,031M. This ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. Estimates are given in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 15.89. The current P/CF Ratio is 24.77 based on Cash Flow per Share estimate for 2023 of $6.24, Cash Flow of $276M, and a stock price of $154.59. The current ratio is 47% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get similar results in CDN$.
I get an historical median dividend yield of 0.75%. The current dividend yield is 0.58% based on dividends of $0.90 and a stock price of $154.59. The current yield is 22% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get similar results in CDN$.
I get a 10 year median dividend yield of 0.75%. The current dividend yield is 0.58% based on dividends of $0.90 and a stock price of $154.59. The current yield is 22% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get similar results in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 1.34. The current P/S Ratio is 1.58 based on Revenue estimate for 2023 of $4,327M, Revenue per Share of $97.84 and a stock price of $154.59. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests say this. The P/S Ratio test says it is reasonable, but above the median and the difference from median is rather high at 18%. Also, most of the ratios are quite high ones. Other tests show stock price from reasonable to expensive
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $155.98 US$ (214.04 CDN$) with a high of $173.00 US$ (237.39 CDN$) to a Low of $142 US$ (194.85 CDN$). The consensus price of $155.98 US$ ($214.04 CDN$) implies a total return of 1.48% with 0.90% from capital gains and 0.58% from dividends. To me, that does not match the Strong Buy Rating and is a big inconsistency. Even the high 12 month stock price of $173.00 implies only a total return of 12.49% with 11.91% from capital gains and 0.58% from dividends.
Analyst on Stock Chase really like this stock. Stock Chase gives this stock 4 stars out of 5. This stock is on all the dividend lists I follow. Robin Brown Motley Fool thinks this stock is a great buy for long term returns. Aditya Raghunath on Motley Fool thinks this is a cheap stock to buy in November 2023. The company put out a press release via Globe Newswire about their 2022 reuslts. The company put out a press release via Globe Newswire on their third quarter of 2023.
Simply Wall Street via Yahoo Finance put out a recent report on this stock. Simply Wall Street has two warnings on this stock of has a high level of debt; and significant insider selling over the past 3 months. Simply Wall Street gives this stock 2 and one half stars out of 5.
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 22, 2023 around 5 pm. Tomorrow on my other blog I will write about Prepare for Possible Job Loss.... learn more on Tuesday, November 21, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment