FirstService (NASDAQ:FSV) Releases Earnings Results, Beats Expectations By $0.04 EPS

Key Points

• FirstService beat quarterly expectations, reporting EPS of $1.75 versus the $1.71 consensus, with revenue of $1.44 billion in line with estimates and up 2.4% year over year.
• Conference call commentary was broadly positive, with management saying Q2 performance modestly exceeded expectations, led by strength in the Brands division and improving restoration momentum late in the quarter.
• Not all segments were strong, as roofing remained a weak spot with revenue down 6% reported and 10% organically, though the company said some delayed projects are still in backlog.

FirstService (NASDAQ:FSV - Get Free Report) TSE: FSV announced its quarterly earnings results on Thursday. The financial services provider reported $1.75 EPS for the quarter, beating analysts' consensus estimates of $1.71 by $0.04, Briefing.com reports. FirstService had a net margin of 2.92% and a return on equity of 17.91%. The company had revenue of $1.44 billion for the quarter, compared to analysts' expectations of $1.44 billion. During the same period in the prior year, the company posted $1.71 EPS. FirstService's revenue was up 2.4% compared to the same quarter last year.

Here are the key takeaways from FirstService's conference call:

• Q2 results modestly beat expectations, with revenue up 2%, adjusted EBITDA up 3% to $161.7 million, and adjusted EPS up 2% year over year. Management said performance was better than expected, especially in the Brands division.
• Restoration momentum improved materially late in the quarter, as the company signed multiple large-loss projects and rebuilt its backlog to historically healthy levels. Management expects about 5% year-over-year growth in restoration in the back half, with more upside tied to storm activity and 2027 conversion.
• Roofing remains the weak spot, with Q2 revenue down 6% reported and 10% organically amid a stubbornly weak and highly competitive market. The company also said some large reroof projects were delayed, although they remain in backlog.
• Century Fire continued to outperform, posting more than 10% revenue growth and improved backlog, and management expects another strong 10%+ growth pace in Q3 and Q4. Recent acquisitions in Florida and Texas should expand service capabilities.
• Capital allocation remains flexible, with the company buying back 1.8 million shares in Q2 for about $250 million while still keeping leverage conservative at 1.8x net debt to EBITDA and over $800 million of liquidity. Management said it can continue repurchases and pursue tuck-in M&A in tandem, depending on opportunities.

FirstService Stock Up 5.2%

Shares of NASDAQ FSV traded up $6.87 during mid-day trading on Friday, hitting $138.01. 83,654 shares of the stock traded hands, compared to its average volume of 215,467. The stock has a fifty day moving average price of $139.31 and a 200-day moving average price of $145.45. The company has a debt-to-equity ratio of 0.74, a quick ratio of 1.66 and a current ratio of 1.66. The company has a market cap of $6.34 billion, a price-to-earnings ratio of 38.94, a PEG ratio of 4.28 and a beta of 0.94. FirstService has a 52 week low of $119.41 and a 52 week high of $209.66.

FirstService Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Tuesday, July 7th. Investors of record on Tuesday, June 30th were given a dividend of $0.305 per share. The ex-dividend date was Tuesday, June 30th. This represents a $1.22 annualized dividend and a dividend yield of 0.9%. FirstService's payout ratio is currently 34.46%.

Hedge Funds Weigh In On FirstService

A number of institutional investors and hedge funds have recently made changes to their positions in the business. The Manufacturers Life Insurance Company raised its holdings in FirstService by 493.4% in the fourth quarter. The Manufacturers Life Insurance Company now owns 2,775,353 shares of the financial services provider's stock worth $432,173,000 after buying an additional 2,307,684 shares during the last quarter. Wellington Management Group LLP raised its holdings in FirstService by 18,366.1% in the 4th quarter. Wellington Management Group LLP now owns 719,993 shares of the financial services provider's stock worth $111,981,000 after acquiring an additional 716,094 shares during the last quarter. Janus Henderson Group PLC lifted its position in FirstService by 73.6% in the 4th quarter. Janus Henderson Group PLC now owns 1,367,564 shares of the financial services provider's stock valued at $212,698,000 after acquiring an additional 579,615 shares in the last quarter. Orbis Allan Gray Ltd boosted its stake in FirstService by 36.5% during the 4th quarter. Orbis Allan Gray Ltd now owns 1,984,677 shares of the financial services provider's stock valued at $308,677,000 after purchasing an additional 530,489 shares during the last quarter. Finally, BCV Asset Management Inc. purchased a new position in shares of FirstService in the fourth quarter worth $57,550,000. Institutional investors own 69.35% of the company's stock.

Analyst Ratings Changes

FSV has been the topic of several recent research reports. Stifel Nicolaus dropped their target price on FirstService from $215.00 to $200.00 and set a "buy" rating on the stock in a research report on Monday, April 27th. Weiss Ratings cut FirstService from a "hold (c)" rating to a "hold (c-)" rating in a research report on Friday, May 29th. Loop Capital initiated coverage on FirstService in a research note on Monday, May 4th. They set a "hold" rating and a $140.00 price objective on the stock. TD increased their price target on shares of FirstService from $204.00 to $207.00 and gave the stock a "buy" rating in a report on Tuesday, July 14th. Finally, BMO Capital Markets set a $192.00 price objective on shares of FirstService in a research report on Friday. Eight equities research analysts have rated the stock with a Buy rating and four have given a Hold rating to the company's stock. According to data from MarketBeat, the company has an average rating of "Moderate Buy" and a consensus target price of $194.78.

FirstService Company Profile

FirstService Corporation, founded in 1989 and headquartered in Toronto, Ontario, is a leading provider of property services in North America. The company operates through two principal segments—FirstService Residential and FirstService Brands—offering a broad range of services to residential, commercial and homeowner association clients.

FirstService Residential delivers community management, financial oversight and consulting services to thousands of residential communities across the United States and Canada.

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