Critical Review: FirstService (FSV) versus Its Peers

FirstService (NASDAQ: FSV) is one of 23 publicly-traded companies in the “Real Estate Services” industry, but how does it compare to its competitors? We will compare FirstService to similar businesses based on the strength of its earnings, dividends, institutional ownership, risk, valuation, profitability and analyst recommendations.

Profitability

This table compares FirstService and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FirstService 2.74% 24.16% 5.65%
FirstService Competitors 4.69% 15.85% 3.20%

Insider and Institutional Ownership

61.2% of FirstService shares are owned by institutional investors. Comparatively, 68.9% of shares of all “Real Estate Services” companies are owned by institutional investors. 12.8% of shares of all “Real Estate Services” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for FirstService and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstService 0 6 0 0 2.00
FirstService Competitors 77 313 622 17 2.56

FirstService presently has a consensus target price of $66.50, suggesting a potential downside of 2.69%. As a group, “Real Estate Services” companies have a potential upside of 4.37%. Given FirstService’s competitors stronger consensus rating and higher probable upside, analysts plainly believe FirstService has less favorable growth aspects than its competitors.

Earnings and Valuation

This table compares FirstService and its competitors gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
FirstService $1.48 billion $33.59 million 55.11
FirstService Competitors $2.13 billion $74.49 million -1,236.84

FirstService’s competitors have higher revenue and earnings than FirstService. FirstService is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Dividends

FirstService pays an annual dividend of $0.49 per share and has a dividend yield of 0.7%. FirstService pays out 39.5% of its earnings in the form of a dividend. As a group, “Real Estate Services” companies pay a dividend yield of 1.3% and pay out 39.3% of their earnings in the form of a dividend. FirstService lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Risk & Volatility

FirstService has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, FirstService’s competitors have a beta of 1.53, suggesting that their average share price is 53% more volatile than the S&P 500.

Summary

FirstService competitors beat FirstService on 12 of the 15 factors compared.

About FirstService

Firstservice Corporation is a provider of residential property management and other essential property services to residential and commercial customers. The Company operates through two segments: FirstService Residential and FirstService Brands. FirstService Residential is a property manager and provides ancillary services in the areas of on-site staffing, including building engineering and maintenance, full-service amenity management, security, concierge and front desk personnel, and landscaping; banking and insurance products, and energy conservation and management solutions. FirstService Brands provides essential property services to residential and commercial customers in North America through franchise networks and Company-owned locations. The principal brands in this division include Paul Davis Restoration, California Closets, Certa Pro Painters, Pillar to Post Home Inspectors, Floor Coverings International, College Pro Painters, Century Fire Protection and Service America.

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