On Thursday, RBC Capital maintained its Outperform rating and a $187.00 stock price target for FirstService Corp (NASDAQ:FSV). The firm acknowledged the company's recent expansion through its subsidiary, Roofing Corp of America (RCA), which has acquired Crowther Roofing and Cooling along with Hamilton Roofing. These additions are expected to contribute over $150 million in annual revenues and strengthen RCA's market position in Florida.
The acquisitions are seen as a strategic enhancement of FirstService's existing services in a region where it already has a significant footprint through its restoration platform. The firm's statement highlighted the positive outlook for the roofing sector, suggesting that it will offer considerable growth opportunities for FirstService in the forthcoming years.
FirstService's strategic move to acquire these two companies is part of its broader efforts to expand its market share in the roofing industry, particularly in the Florida market. The acquisition is set to increase its scale and capabilities within this key region, which is anticipated to drive revenue growth.
The company's focus on the roofing platform is part of a long-term growth strategy that RBC Capital has previously identified as a potential driver of significant growth for FirstService. With the integration of the new businesses, FirstService is expected to enhance its service offerings and market reach in the highly competitive Florida market.
The reiterated Outperform rating and $187.00 stock price target reflect RBC Capital's confidence in FirstService's growth trajectory following the acquisitions. The firm's analysis indicates a favorable view of the company's strategic decisions and their expected contribution to its performance in the coming years.
In other recent news, FirstService Corporation has broadened its reach with the acquisition of two Florida-based roofing companies, Crowther Roofing and Cooling, and Hamilton Roofing, through its subsidiary, Roofing Corp of America (RCA). These acquisitions are set to increase RCA's annual revenues by over $150 million. The leadership teams of both firms will retain minority equity interests and continue to oversee daily operations.
In financial updates, FirstService reported a 14% rise in total revenues to $1.16 billion, largely spurred by strategic acquisitions. The company's adjusted EBITDA also saw a modest 2% increase, reaching $83.4 million. FirstService Residential revenues grew by 11% through organic growth and new contracts, while the acquisition of RCA contributed to a 16% revenue increase in FirstService brands.
Still, the company noted a decrease in organic revenues for FirstService brands by 6%. Despite a decline in some sectors, such as the restoration segment due to mild weather patterns, the company is optimistic about its growth prospects, particularly in its residential services and following the recent acquisition of Rizzetta & Company. These recent developments underscore FirstService's strategic focus on expanding its service offerings and revenue streams.
InvestingPro Insights
In light of RBC Capital's optimistic outlook on FirstService Corp, recent data from InvestingPro complements the firm's perspective. FirstService has demonstrated a robust financial position, with a market capitalization of $6.79 billion and a revenue growth of 13.85% over the last twelve months as of Q1 2024. This growth is indicative of the company's expanding operations and may signal further potential for investors.
Moreover, FirstService's strategic acquisitions in the Florida roofing market align with the company's nine-year streak of raising dividends, showcasing its commitment to shareholder returns. Additionally, the company is trading at a high earnings multiple of 74.52, which could reflect the market's high expectations for its future earnings potential.
InvestingPro Tips highlight FirstService as a prominent player in the Real Estate Management & Development industry, with expectations of net income growth this year. Furthermore, the company's liquid assets surpassing short-term obligations suggest a solid financial footing that supports its expansion efforts.
Investors interested in a deeper analysis of FirstService can find additional insights on InvestingPro. There are 5 more tips available that could provide a more nuanced understanding of the company's financial health and market position. For those looking to leverage these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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