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First Service Corporation or Colliers International Group Inc.: Which Is the Better Buy?

June 1, 2015, is a day I’m sure shareholders of both Colliers International Group Inc. (TSX:CIGI)(NASDAQ:CIGI) and FirstService Corp. (TSX:FSV)(NASDAQ:FSV) will likely never forget.

On that day almost two years ago, the two service-related businesses were separated into their own publicly traded companies, dual-listed on both the TSX and NASDAQ.

For every share you’d held in the old FirstService, it was converted into one share of its real estate services business Colliers International; you also got one new share in the new FirstService Corp.

Before the separation, FirstService stock was trading around $78. Since shareholders would hold one share of both FSV and CIGI, let’s say that each stock opened trading June 2, 2015, at $38 per share.

On that basis, FSV is up 122.5% over the past two years, and CIGI is up a more modest 89.4%. Needless to say, your $78 before the split is worth $156.53 today — a 100.7% return.

Not bad, indeed.

If you can only hold one

Let’s say the investment gods have decided that you must sell one of these stocks. The other is yours to keep. If you’ve been a FirstService shareholder since long before the 2015 separation, it’s probably akin to asking a parent which child they loved more (okay, not really). There’s no easy answer.

So, let me try to make a decision for you.

Argument for Colliers International

Colliers reported Q1 2017 earnings in early May, and they were excellent. Adjusted net earnings and revenues were up 77% and 12%, respectively, year over year to US$13 million and US$423 million, respectively.

All three segments of its business (leasing, sales, and advisory) saw increased revenue. Leasing did the best, generating a 22% increase in year-over-year revenue on a local currency basis.

On the regional level, its Americas and Asia/Pacific regions saw healthy double-digit revenue increases, while its EMEA (Europe, Middle East, and Africa) had a 4% decline on a local currency basis.

Other than that one blemish, it was an excellent way to start off fiscal 2017. As Colliers continues to acquire other companies to build its global business, I expect it will continue to see positive results.

Argument for FirstService

I could probably just write “ditto” about FirstService’s first-quarter results and call it a day, but I won’t.

Top line, it saw revenues increase 22% to US$376 million. On the bottom line, adjusted net earnings increased 115% to US$6.1 million.

FirstService has two operating segments: FirstService Residential manages over 1.6 million residential housing units in the U.S. and Canada, and FirstService Brands provides home-related services such as painting, home inspections, home restoration, etc.

While FirstService Residential generates more than twice the amount of revenue as FirstService Brands, the operating margins are higher in part because of its franchise operations, which run on an “asset light” business model.

It’s good news all around.

The winner is…

There’s little to choose between the two stocks. I like them both. I recommended FirstService to Foolish readers last June, and it’s up 43% since. Not much has changed regarding my outlook.

If you own both, I’d keep both. If you don’t own either, I’d probably lean toward Colliers International because it has a more reasonable valuation.

Heck, you might as well flip a coin. Heads, you win; tails, you win.

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Fool contributor Will Ashworth has no position in any stocks mentioned.

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