On Monday, RBC Capital reiterated its outperform rating on FirstService Corp (NASDAQ:FSV) stock with a steady price target of $187.00. The firm anticipates that the company will announce its second-quarter results of 2024 before the market opens on Thursday, July 25.
The focus is on the expected contributions from the residential division and the Brands businesses, particularly Roofing Corp of America, which are projected to boost revenue and adjusted EBITDA growth.
The report further details that while these segments are likely to perform well, the increased interest costs might have an impact on the adjusted earnings per share (EPS). The firm's outlook for FirstService remains positive despite potential pressure on earnings from these higher interest expenses.
FirstService, known for its property services, is expected to demonstrate solid financial growth in its upcoming report, primarily driven by its residential services and strategic acquisitions. The Brands segment, which includes Roofing Corp of America, is particularly highlighted as a significant contributor to the company's performance.
RBC Capital's assessment underscores the balance between strong operational performance and the financial challenges posed by the current interest rate environment. The maintained price target of $187 indicates confidence in the company's ability to navigate these factors effectively.
Investors and market watchers are now looking forward to the release of FirstService's quarterly financial results later this month, which will provide further insights into the company's financial health and future prospects.
In other recent news, FirstService Corp reported a significant 14% revenue increase, reaching $1.16 billion, primarily due to strategic acquisitions. Adjusted EBITDA also rose by 2% to $83.4 million.
The company's expansion into the commercial roofing sector was achieved through the acquisitions of RCA, Crowther Roofing, and Hamilton Roofing, which collectively contribute over $150 million in annual revenues and establish FirstService's substantial new presence in Florida.
Scotiabank recently updated its outlook on FirstService, raising the price target to $175 from $170 while maintaining a Sector Perform rating. BMO Capital Markets also increased its price target for the company to $196 from $193, maintaining an Outperform rating. Both adjustments reflect expectations for the company's return to robust earnings growth in the upcoming quarters.
The company's residential revenues grew by 11% through organic growth and new contracts, while the acquisition of Roofing Corp of America contributed to a 16% revenue increase in FirstService brands. These are among the recent developments that indicate the company's strategic direction and potential for growth.
InvestingPro Insights
As FirstService Corp (NASDAQ:FSV) approaches its second-quarter earnings release, current InvestingPro data and insights provide a multifaceted perspective on the company's stock performance. With a market capitalization of $7.33 billion, the company is trading at a high earnings multiple with a P/E ratio of 80.18, which adjusts to 74.31 for the last twelve months as of Q1 2024. Despite this high valuation, revenue growth remains robust at 13.85% over the same period, indicating potential for continued expansion.
InvestingPro Tips suggest that FirstService has a history of consistent dividend growth, having increased its dividend for 9 consecutive years, with an 11.11% growth in the dividend over the last twelve months as of Q1 2024. Additionally, the company is trading near its 52-week high, at approximately 94.91% of that peak, reflecting investor confidence. These factors, combined with the fact that FirstService operates with a moderate level of debt and liquid assets exceeding short-term obligations, may reassure investors of the company's financial stability.
For those seeking more comprehensive analysis and additional insights, InvestingPro offers further tips on FirstService Corp. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking access to exclusive data that could inform your investment decisions.
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