FirstService (FSV) AI Stock Analysis

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FirstService

(TSX:FSV)

75Outperform

FirstService's strong financial performance and strategic growth initiatives are significant strengths, reflected in high revenue and EBITDA growth. However, technical indicators suggest caution due to the stock's bearish trend and high valuation. Despite these challenges, robust earnings call results and favorable corporate events contribute to a solid overall score.

Positive Factors

Industry Trends

FirstService Corporation is expected to benefit from an increase in demand for its services driven by industry trends.

Market Position

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

Negative Factors

Economic Stability

Economic uncertainties could impact the financial stability of FirstService Corporation.

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

$10.40B

Dividend Yield0.64%

Average Volume (3M)104.38K

Price to Earnings (P/E)56.3

Beta (1Y)0.83

Revenue Growth22.24%

EPS Growth35.09%

CountryCA

Employees30,000

SectorReal Estate

Sector Strength79

IndustryReal Estate - Services

Share Statistics

EPS (TTM)4.07

Shares Outstanding45,443,500

10 Day Avg. Volume92,250

30 Day Avg. Volume104,380

Financial Highlights & Ratios

PEG Ratio1.60

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 CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$302.15

Price Target Upside31.97% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

FirstService Business Overview & Revenue Model

Company DescriptionFirstService Corporation (FSV) is a leading North American provider of essential property services, including residential property management and property services. The company operates through two main segments: FirstService Residential, which is the largest manager of residential communities, and FirstService Brands, a leader in property services such as restoration, painting, and home inspection. With a commitment to service excellence, FirstService aims to improve the quality of living and working environments for its clients.

How the Company Makes MoneyFirstService makes money primarily through its two main segments: FirstService Residential and FirstService Brands. FirstService Residential generates revenue by providing property management services to residential communities, including homeowner associations and condominiums, through long-term contracts. This segment benefits from recurring management fees and additional service fees for various community management activities. FirstService Brands, on the other hand, derives income from offering a range of property services such as disaster restoration, painting, and home inspections. This segment operates through a combination of franchise and company-owned operations, resulting in revenue from franchise fees, royalties, and direct service fees. The company's earnings are bolstered by its strong reputation, extensive service network, and strategic acquisitions that expand its service portfolio and geographic reach.

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 Price228.95

Price Trends

50DMA

248.09

Negative

100DMA

255.93

Negative

200DMA

246.71

Negative

Market Momentum

MACD

-2.49

Negative

RSI

41.36

Neutral

STOCH

23.37

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 228.95 is below the 20-day moving average (MA) of 239.80, below the 50-day MA of 248.09, and below the 200-day MA of 246.71, indicating a bearish trend. The MACD of -2.49 indicates Negative momentum. The RSI at 41.36 is Neutral, neither overbought nor oversold. The STOCH value of 23.37 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BEI.UN	77 Outperform	$3.39B	5.35	13.02%	2.33%	10.56%	-15.69%
FSV	75 Outperform	$10.40B	56.31	12.15%	0.64%	22.24%	35.09%
MRG.UN	75 Outperform	C$872.64M	8.72	5.29%	4.58%	3.79%	-40.78%
CAR.UN	72 Outperform	C$6.52B	23.12	3.20%	3.71%	4.45%	―
IIP.UN	70 Outperform	C$1.55B	―	-6.27%	3.67%	3.85%	-266.02%
CIGI	68 Neutral	$8.10B	36.24	14.89%	0.27%	13.08%	146.40%
Sector *	61 Neutral	$4.43B	16.13	-3.23%	11.37%	6.25%	-21.19%

* Real Estate Sector Average

Performance Comparison

TSE:FSV

FirstService

228.95

17.53

8.29%

TSE:CIGI

Colliers International Group

159.99

-0.86

-0.54%

TSE:BEI.UN

Boardwalk REIT

63.67

-8.33

-11.57%

TSE:CAR.UN

Canadian Apartment

40.15

-2.82

-6.56%

TSE:MRG.UN

Morguard NA REIT UN

16.33

1.04

6.80%

TSE:IIP.UN

InterRent REIT Un

10.52

-1.72

-14.05%

FirstService Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -11.99% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong overall performance with significant revenue and EBITDA growth driven by strategic acquisitions and robust performance in several segments. However, challenges such as increased costs, budgetary pressures, and a decline in the home service brands were notable concerns.

Highlights

Strong Revenue and EBITDA Growth

FirstService Corporation reported a 20% growth in revenues and a 24% increase in EBITDA for the fiscal year 2024, doubling their long-term growth goal of 10%.

Significant Q4 Performance

Fourth-quarter revenues increased by 27% with organic growth at 10%, and EBITDA rose by 33% with a 50 basis point improvement in margins.

Restoration Segment Success

Paul Davis and First On-site recorded a 40% increase in revenue year-over-year, benefiting from hurricanes Helene and Milton.

FirstService Brands Division Growth

Revenues were up by 45% in Q4, driven by the addition of Roofing Corp of America and strong restoration results, with organic growth at 16%.

Century Fire Organic Growth

Century Fire achieved 25% organic growth in Q4 2024 compared to Q4 2022.

Lowlights

Home Service Brands Revenue Decline

Revenues for the home service brands were slightly down from the prior year, continuing a trend of decreased lead activity and market challenges.

Budgetary Pressures at FirstService Residential

FirstService Residential faced budgetary pressures from rising costs, including insurance premiums and legislated increases in reserves, impacting management contracts.

Higher Corporate Costs

Significantly higher corporate costs were reported due to non-cash foreign exchange movements, impacting adjusted earnings per share.

Increased Interest Costs

Annual interest costs rose by 75% in 2024 due to higher rates and increased debt levels, tempering EPS growth.

Company Guidance

In the fourth quarter of fiscal year 2024, FirstService Corporation reported a 27% increase in revenues, driven by 10% organic growth primarily from the brands division, and a 33% rise in EBITDA with a 50 basis point improvement in margins. Earnings per share increased by 21%. The Roofing Corp of America acquisition significantly contributed to revenue growth, with the brands division seeing a 45% increase in revenues and 16% organic growth. The restoration segment, fueled by hurricanes Helene and Milton, saw a revenue increase of 40% year-over-year, with $60 million generated from named storms. For the full year, revenues rose 20% to $5.22 billion, with a 24% increase in adjusted EBITDA, reflecting a 9.8% margin, up 20 basis points. The company anticipates high single-digit revenue growth in 2025, with mid-single-digit organic growth and continued margin expansion.

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.