FirstService (FSV:NAS) Fundamental Valuation Report

FirstService (FSV:NAS) Fundamental Valuation Report

Fundamental Valuation Report

FirstService(FSV:NAS)

Real Estate:Real Estate Services

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$167.91 (USD) 04/28/2021

Weighted Valuation
$168.54 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 0.4%

Valuation Models Multiples: $152.19 (USD)
Adjusted Book Value: $148.64 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $204.80 this stock is Undervalued

Company Overview (FSV:NAS USD)

Price 167.91
Range 167.84 – 173.71
52 week 78.70 – 174.60
Open 173.71
Vol / Avg. 99052/42548
Mkt cap 7.32B
P/E 70.26
Div/yield 0.66/0.00
EPS 2.02
Shares 43.81M
Beta 0.91

Company Description

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, and generates most of the company’s revenue. FirstService Brands 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.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for FSV:NAS

Using a discounted cash flow model we generated an intrinsic value of $106.55 (USD) for FSV:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

FSV:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $106.55 1% 5% 1% 5%
WACC (or Ke) 6.55 $134.20 $88.04
Terminal Growth Rate 1.50 $89.80 $131.58
Tax Rate 0.25 $113.95 $99.15
Cash Flow 368,902,442 $100.53 $112.57
Capital Expenditures -38,403,800 $105.97 $107.13
Long Term Debt 243,506,000 $106.83 $106.27

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $225.52 (USD) for FSV:NAS. We also generated a valuation of $110.25 (USD) using other metrics and comparables.
The comparable companies were Newmark Group (NMRK:NAS), Redfin (RDFN:NAS), Brookfield Prop Partners (BPY:NAS), eXp World Holdings (EXPI:NAS) and Kennedy-Wilson Holdings (KW:NYS).

Company FSV:NAS End Date Value
Earnings/Share $2.02 (USD)
Book Value/Share $15.07 (USD)
Sales/Share $64.20 (USD)
Cash Flow/Share $6.76 (USD)
EBITDA/Share $6.21 (USD)
Price Based on Comps Adjustment Factor (%)
$154.66 (USD) 30.5
$164.94 (USD) 0.0
$268.78 (USD) -74.3
$368.98 (USD) -22.6
$363.02 (USD) 13.7
FSV:NAS Ratios Used Average Values NMRK:NAS RDFN:NAS BPY:NAS EXPI:NAS KW:NYS
70.26 PE Ratio 76.57 28.08 0.00 0.00 170.67 30.95
10.69 PB Ratio 10.94 3.07 12.24 0.65 36.63 2.14
2.58 PS Ratio 4.19 1.03 7.79 2.73 3.02 6.36
26.37 PCF Ratio 57.20 0.00 112.69 13.51 45.39 0.00
27.42 EV to EBITDA 134.93 11.70 440.81 65.57 143.09 13.48

Multiples

Using a multiples approach we generated a valuation of  $152.19 (USD) for FSV:NAS

Company FSV:NAS End Date Value
Earnings/Share $2.02 (USD)
Book Value/Share $15.07 (USD)
Sales/Share $64.20 (USD)
Cash Flow/Share $6.76 (USD)
EBITDA/Share $6.21 (USD)
Price Based on Comps Adjustment Factor
$147.56 (USD) 0
$149.08 (USD) 0
$141.13 (USD) 0
$161.15 (USD) 0
$162.02 (USD) 0
Ratios Ratio Average
PE Ratio 73.05
PB Ratio 9.89
PS Ratio 2.20
PCF Ratio 23.85
EV to EBITDA 26.09

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  FSV:NAS for the last 6 years was  9.81

We ran the Adjusted Book Value for  FSV:NAS and generated a book value of  $15.15 (USD)
By multiplying these we get an adjusted valuation of  $148.64 (USD)

Analyst Data

In the Stockcalc database there are 7 analysts that provide a valuation for FSV:NAS. The 7 analysts have a concensus valuation for FSV:NAS for 2021 of $204.80 (USD).

FSV:NAS FirstService

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 3 0 3.8571 Outperform 2021-4-27

Current Price: 167.91 USD

Analyst Consensus
USD Millions 2021 2022
Mean EPS 4.72 5.26
# EPS Analysts 5 5
Mean Revenue 3,789.70 4,129.30
# Revenue Analysts 6 6
Mean Target Price 204.80
Mean Cash Flow 6.71 7.24
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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