FirstService (FSV) AI Stock Analysis

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FirstService

(NASDAQ:FSV)

77Outperform

FirstService's overall stock score of 77 reflects its solid financial performance characterized by robust revenue growth and effective cash flow management. The stock benefits from a positive earnings call, emphasizing strategic growth and margin improvements. However, technical indicators suggest potential short-term volatility, and the high P/E ratio points to a premium valuation, which could limit upside potential. Despite these concerns, the company's strong financial health and strategic initiatives underpin its long-term growth prospects.

Positive Factors

Financial Performance

FirstService reported solid first-quarter results, delivering a strong profit beat.

Market Position

Analyst sees potential in FirstService Corporation due to its strong market position and ability to capitalize on growth opportunities.

Strategic Initiatives

FirstService Corporation's strategic initiatives are anticipated to enhance its competitive edge in the market.

Negative Factors

Economic Uncertainty

Economic uncertainties could impact the financial stability of FirstService Corporation.

Macro Environment

Tariff-related macro uncertainties weighed on organic growth in Roofing and Home Services.

Real Estate Sector

Challenges in the real estate sector may pose risks to FirstService Corporation's performance.

FirstService (FSV) vs. S&P 500 (SPY)

Market Cap

$10.76B

Dividend Yield0.6%

Average Volume (3M)104.22K

Price to Earnings (P/E)60.0

Beta (1Y)0.82

Revenue Growth22.37%

EPS Growth46.30%

CountryCA

Employees30,000

SectorReal Estate

Sector Strength77

IndustryReal Estate - Services

Share Statistics

EPS (TTM)3.97

Shares Outstanding45,443,500

10 Day Avg. Volume83,538

30 Day Avg. Volume104,221

Financial Highlights & Ratios

PEG Ratio1.30

Price to Book (P/B)N/A

Price to Sales (P/S)1.46

Price to Cash Flow (P/CF)21.90

P/FCF Ratio29.40

Enterprise Value/Market Cap1.25

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit7.86

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$296.89

Price Target Upside25.36% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

FirstService Business Overview & Revenue Model

Company DescriptionFirstService Corporation (FSV) is a leading North American provider of essential property services. The company operates through two main segments: FirstService Residential and FirstService Brands. FirstService Residential offers property management services to residential communities, including condominiums, cooperatives, homeowner associations, and large-scale master-planned communities. FirstService Brands comprises franchised and company-owned operations in essential property services such as painting, restoration, and cleaning, delivering a wide range of services to both residential and commercial customers.

How the Company Makes MoneyFirstService makes money primarily through its two business segments: FirstService Residential and FirstService Brands. FirstService Residential generates revenue by providing property management services, including maintenance, administrative support, and financial management, usually through contracts with homeowners associations and similar entities. This segment benefits from long-term relationships and recurring revenue streams. FirstService Brands earns revenue through franchising and direct operations in property services, where franchisees pay initial franchise fees as well as ongoing royalties based on their sales. The company also benefits from its investment in technology and customer service, enhancing client satisfaction and loyalty, which in turn supports sustained revenue growth. Key partnerships and a strong brand presence in North American markets further bolster its earnings potential.

FirstService Financial Statement Overview

Summary

FirstService exhibits strong financial health with robust revenue growth and profitability. The company demonstrates effective cash flow management, though leverage is slightly higher than ideal. Overall, the financials suggest a well-managed company with opportunities for margin enhancement.

Income Statement

Very Positive

FirstService has demonstrated robust revenue growth, with a 20.3% increase from 2023 to 2024. The company maintains a healthy Gross Profit Margin of 32.9% and a Net Profit Margin of 2.6% for 2024. The EBIT Margin stands at 6.5%, and the EBITDA Margin is 9.7%, indicating solid operational efficiency. Overall, the income statement reflects strong revenue growth and profitability, though net margins suggest room for improvement in cost management.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio is 1.32, indicating a moderate level of leverage. The Return on Equity (ROE) is 11.3%, showing effective use of equity to generate profits. The Equity Ratio of 28.3% is moderate, reflecting a balanced approach to financing. While leverage is higher than ideal, the company manages to maintain a stable financial position with a reasonable equity base.

Cash Flow

Very Positive

FirstService's Free Cash Flow grew by 6.3% from 2023 to 2024, a positive indicator of cash generation capacity. The Operating Cash Flow to Net Income Ratio is 2.13, highlighting strong cash flow relative to net income. The Free Cash Flow to Net Income Ratio is 1.29, suggesting efficient conversion of net income into free cash flow. The company exhibits strong cash flow management, though further improvement in free cash flow growth could enhance its financial flexibility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
5.22B	4.33B	3.75B	3.25B	2.77B
	Gross Profit
1.72B	1.39B	1.18B	1.05B	900.62M
	EBIT
337.51M	244.89M	219.03M	201.64M	169.41M
	EBITDA
506.02M	378.64M	333.69M	312.63M	272.09M
	Net Income Common Stockholders
134.38M	100.39M	121.07M	135.21M	87.26M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
227.60M	187.62M	136.22M	165.66M	184.29M
	Total Assets
4.19B	3.63B	2.77B	2.51B	2.20B
	Total Debt
1.57B	1.42B	952.16M	823.19M	753.71M
	Net Debt
1.34B	1.23B	815.95M	657.52M	569.42M
	Total Liabilities
2.56B	2.27B	1.63B	1.49B	1.34B
	Stockholders Equity
1.19B	1.02B	907.47M	799.72M	660.40M
Cash Flow		Free Cash Flow
172.88M	187.63M	28.28M	109.06M	252.35M
	Operating Cash Flow
285.67M	280.36M	105.89M	167.27M	291.76M
	Investing Cash Flow
-323.70M	-646.33M	-160.80M	-206.32M	-142.26M
	Financing Cash Flow
74.41M	413.94M	18.78M	24.43M	-75.20M

FirstService Technical Analysis

Technical Analysis Sentiment

Negative

Last Price236.83

Price Trends

50DMA

241.86

Negative

100DMA

251.66

Negative

200DMA

248.65

Negative

Market Momentum

MACD

-1.17

Negative

RSI

47.93

Neutral

STOCH

62.56

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FSV, the sentiment is Negative. The current price of 236.83 is above the 20-day moving average (MA) of 236.01, below the 50-day MA of 241.86, and below the 200-day MA of 248.65, indicating a neutral trend. The MACD of -1.17 indicates Negative momentum. The RSI at 47.93 is Neutral, neither overbought nor oversold. The STOCH value of 62.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:FSV.

FirstService Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FSV	77 Outperform	$10.76B	60.01	12.15%	0.60%	22.37%	46.30%
BEI.UN	76 Outperform	$3.44B	5.42	13.02%	2.19%	10.56%	-15.69%
MRG.UN	73 Outperform	C$899.36M	8.99	5.29%	4.45%	3.79%	-40.78%
CIGI	68 Neutral	$8.10B	36.55	14.89%	0.26%	13.08%	146.40%
CAR.UN	68 Neutral	C$6.67B	23.58	3.20%	3.62%	4.45%	―
Sector *	59 Neutral	$2.72B	11.58	0.09%	8782.99%	5.32%	-16.79%
IIP.UN	58 Neutral	C$1.62B	―	-6.27%	3.50%	3.85%	-266.02%

* Real Estate Sector Average

Performance Comparison

TSE:FSV

FirstService

236.83

34.33

16.95%

TSE:CIGI

Colliers International Group

159.93

13.90

9.52%

TSE:BEI.UN

Boardwalk REIT

64.48

-5.77

-8.22%

TSE:CAR.UN

Canadian Apartment

41.26

-0.14

-0.34%

TSE:MRG.UN

Morguard NA REIT UN

16.83

2.00

13.49%

TSE:IIP.UN

InterRent REIT Un

11.01

-0.69

-5.90%

FirstService Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -1.23%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Positive

The earnings call reflects a generally positive outlook, with strong performance in earnings and margin growth. However, challenges persist in organic growth for home services and delays in commercial contracts due to economic uncertainty. The company's solid financial position and strategic acquisitions provide a strong foundation for future growth.

Q1-2025 Updates

Positive Updates

Impressive Earnings and Margin Growth

Earnings per share for the quarter were up 37%, and EBITDA increased by 24% with a 110 basis point improvement in consolidated margin.

Revenue Growth and Tuck-Under Acquisitions

Total revenues increased by 8% year-over-year, driven by tuck-under acquisitions, with FirstService Brands experiencing a 10% revenue increase.

Strong Financial Position

The company maintained conservative leverage at two times net debt to trailing twelve months EBITDA and bolstered debt capacity with a $1.75 billion credit facility.

Residential Segment Performance

FirstService Residential revenues were up 6%, and EBITDA grew by 17%, with margin improvements driven by cost efficiencies.

Continued Optimism for Future Growth

Despite macroeconomic uncertainties, the company is optimistic about accelerated activity levels with market stability and expects revenue growth similar to 8% in Q2.

Negative Updates

Organic Decline in Home Services

Home services revenues were down about 3% year-over-year, attributed to lower consumer confidence and economic uncertainty impacting lead flow.

Weather and Economic Uncertainty Impacting Roofing

Roofing segment experienced a 10% organic revenue decline due to weather and deferred large commercial contracts, affected by economic uncertainty and tariffs.

Commercial Installation Delays

Deferrals of larger commercial installation contracts in Century Fire and Roofing due to current economic uncertainty, viewed as a timing issue.

Company Guidance

During the First Quarter Investor Conference Call for the fiscal year 2025, the company reported robust financial results, with total revenues up 8% year-over-year, reaching $1.25 billion, largely driven by tuck-under acquisitions. Organic growth was slightly positive, with FirstService Residential seeing a 6% increase in revenues, while FirstService Brands experienced a 10% rise, though organic growth was slightly down. EBITDA increased by 24% to $103.3 million, resulting in a 110 basis point improvement in the consolidated margin to 8.3%. Earnings per share saw a significant 37% increase. The Roofing segment achieved nearly 50% revenue growth due to acquisitions, despite a 10% organic decline attributed to weather and contract deferrals. Restoration revenues were in line with expectations, bolstered by hurricane-related activities in the U.S., despite a decline in Canadian operations. Looking forward, the company anticipates similar growth patterns and margin improvements, with a focus on managing macroeconomic uncertainties and leveraging pent-up demand.

FirstService Corporate Events

Executive/Board ChangesShareholder Meetings

FirstService Corporation Elects Directors and Confirms Auditor

Neutral

Apr 2, 2025

FirstService Corporation announced the election of eight directors at its virtual annual meeting of shareholders. The directors, listed in the company’s management information circular, will serve until the next annual meeting. Additionally, shareholders approved PricewaterhouseCoopers LLP as the auditor for the upcoming year and endorsed a non-binding advisory resolution on executive compensation. These decisions reflect the company’s ongoing commitment to strong governance and shareholder engagement.

Private Placements and FinancingBusiness Operations and Strategy

FirstService Expands Credit Facility to Bolster Growth

Positive

Feb 26, 2025

FirstService Corporation announced an expansion and extension of its unsecured revolving credit facility to US$1.75 billion, maturing in February 2030. This move, supported by a syndicate of 11 banks, enhances the company’s financial flexibility, allowing it to fund future growth initiatives and maintain a strong investment-grade balance sheet.

Business Operations and StrategyFinancial Disclosures

FirstService Reports Strong Financial Performance in 2024

Positive

Feb 5, 2025

FirstService Corporation, a leader in the real estate services sector, reported robust financial results for the fourth quarter and full year ending December 31, 2024. The company achieved significant revenue growth, with revenues reaching $1,365.3 million for the quarter and $5,216.9 million for the year. This financial performance was accompanied by an increase in profitability, as evidenced by the rise in both adjusted EBITDA and EPS, highlighting FirstService’s strong position in the market and the effectiveness of its operational strategies.

DividendsBusiness Operations and Strategy

FirstService Announces 10% Dividend Increase for 2025

Positive

Feb 4, 2025

FirstService Corporation announced a 10% increase in its quarterly cash dividend, raising it to US$0.275 per Common Share, effective April 2025. This marks the company’s tenth consecutive year of at least 10% annual dividend growth, a testament to its strong earnings and cash flow growth. The increase is supported by a business model focused on growth initiatives and financial flexibility, aiming to deliver incremental returns to shareholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.