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FSV Stock Study (11-20-25)

Posted by on April 17, 2025 at 07:19 | Last modified: November 21, 2025 09:12

I recently did a stock study on FirstService Corp. (FSV, $152.27).

M* writes:

     > FirstService Corp operates in two business divisions: FirstService
     > Residential and FirstService Brands. FirstService Residential has
     > service contracts to manage thousands of residential communities,
     > including high-, medium-, and low-rise condominiums and co-
     > operatives. FirstService Brands generates the majority of the
     > company’s revenue and provides property services to residential
     > and commercial customers through the following brands: California
     > Closets; Paul Davis Restoration; CertPro Painters; Pillar to Post;
     > Floor Coverings International; College Pro Painters; and Service
     > America. The company earns the majority of its revenue in the
     > United States, with the remaining revenue generated in Canada.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 17.0% and 16.9%, respectively (excluding 2019 from the full analysis due to overwhelming one-time accounting charge for settlement of long-term incentive arrangement paid to founder). Lines are mostly up, straight, and parallel except for EPS dips in ’22 and ’23. Five- (10-) year EPS R^2 is 0.16 (0.80) and Value Line (VL) gives an Earnings Predictability score of 30.

Over the past decade, PTPM leads peer and industry averages while ranging from 4.7% in ’23 to 6.4% in ’21 with a last-5-year mean of 5.3%. ROE leads peer and industry averages while ranging from 9.8% in ’23 to 27.7% in ’18 with a last-5-year mean of 13.3%. Debt-to-Capital is greater than peer and industry averages while ranging from 50.7% in ’21 to 58.6% in ’18 with a last-5-year mean of 54.0%.

Quick Ratio is 1.3 and Interest Coverage is 4.4 per M* who assigns “Narrow” Economic Moat and gives an A grade for Financial Health (per BI website). VL gives a B++ grade for Financial Strength.

With regard to sales growth:

My 4.0% forecast is below the range.

With regard to EPS growth:

My 7.0% per year forecast is below the long-term-estimate range (mean of five: 10.6%; I only see two unique numbers and am a bit concerned about data duplication). Initial value is ’24 EPS of $2.97/share rather than 2025 Q3 $3.02 (TTM).

My Forecast High P/E is 40.0. Over the past 10 years, high P/E ranges from 50.1 in ’18 to 74.2 in ’23 with a last-5-year mean of 70.5 and a last-5-year-mean average P/E of 56.8. I am well below the range but at top of my comfort zone.

My Forecast Low P/E is 32.0. Over the past 10 years, low P/E increases from 37.4 to 47.6 (’24) with a last-5-year mean of 43.0. I am forecasting near bottom of the range [only ’20 (28.4) is less].

My Low Stock Price Forecast is $106.00. Default ($95.00) based on initial value from above seems unreasonably low. My [arbitrary] projection is 30.4% and 38.9% less than the previous closing price and 52-week low, respectively.

Payout Ratio over the last 10 years decreases from 50.8% to 33.7% in ’24 with a last-5-year mean of 32.0%. I am forecasting at bottom of the range (23.0%).

These inputs land FSV in the SELL zone with a U/D ratio of 0.3. Total Annualized Return (TAR) is 2.4%.

PAR (using Forecast Average–not High–P/E) of 0.4% is unthinkable as an investment prospect. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that is less than the risk-free rate (T-bills).

To assess MOS, I would normally compare my inputs with those of Member Sentiment (MS). Only one other study exists besides mine making this a non-starter.

VL’s projected average annual P/E of 35.0 is less than my 36.0 but its high EPS of $7.90/share (versus $4.17) is much greater.

I think MOS is robust because my inputs are near or below respective analyst/historical ranges.

With regard to valuation, PEG is 2.7 and 6.7 per Zacks and my projected P/E, respectively: quite overvalued (5.0 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is slightly encouraging at 0.89. The “quick and dirty DCF” has stock overvalued by 3%.

Despite being encouraged by a bullish VL and impressive visual inspection for a stock near its 52-week low, I now see an inexplicably high multiple [no competitors listed by M* is unique] and expensive valuation, lack of [high-growth] estimates, no MS (unique), no CFRA report (unique), high debt—an overall dearth, I must say.

Per U/D, FSV is a BUY under $121/share. BI TAR criterion is met [166.8 / ((14.27 / 100 ) +1 ) ^ 5] = $85.60 with a forecast high price ~$167.

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