Shares of FirstService (TSX: FSV) continue to climb in 2023, with the company seeing shares up 27% in 2023 alone. However, the question is, how long can FirstService stock keep it up? Today, we’ll look at what’s been going on with the stock lately and whether it’s still a buy on the TSX today.
Jump on quarters
FirstService stock has been climbing steadily for the last year, each quarter seeing shares bounce higher. A year back, shares surged after strong first-quarter results after beating estimates. However, while results for the third quarter were still great, results missed estimates.
The essential outsourced property service company saw revenue come in at US$1.12 billion for the quarter, an increase of 16% compared to the year before. This included 10% organic growth as well. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also climbed by 17% to US$111.9 million.
“We are pleased to report another very good quarter on the back of continued impressive organic growth across our service lines. With our financial results thus far in 2023, we are well-positioned to deliver on our expectations of strong performance for the full year.”
Scott Patterson, chief executive officer of FirstService.
What are those expectations?
Full-year expectations remain strong for the company, hoping to continue climbing in both organic growth and through acquisitions. FirstService stock saw its Residential revenue climb to US$537.8 million for the quarter, up 12% over last year. This also included 9% organic growth, and from two new client contract wins to expand services.
FirstService Stock and its Brands revenue also climbed to US$579.3 million, a 20% increase with 11% organic growth. This included balance from recent tuck-under acquisitions. It was able to expand its margins with Brands due to operating leverage benefits, which came from growth in revenue from these acquisitions and restorations.
The only downside was the increase in corporate costs, which the company blamed on foreign exchange. These increased to US$5.3 million from US$3 million the year before.
Analysts weigh in
The third quarter saw several analysts weigh in on the results, with the company continuing to show strong performance and long-term opportunities. There remains underlying momentum for the stock, even amidst a likely tougher quarter. Organic growth should therefore continue to the mid- to high single-digit range.
FirstService stock and its outlook therefore look strong, with analysts expecting revenue growth of around 16% in 2023, and 6% in 2024. This is up from earlier projections, with the company continuing to likely outperform the market. In fact, it now has a consensus price target of about $221, a potential upside of 9% as of writing.
Even so, while the company does look like it will end 2023 strong, suggesting a buy, 2024 is likely to show a slowdown. This comes from the company showing less growth thanks to fewer acquisitions and a focus on organic growth. Further, there will be a lower backlog of projects. Even so, long-term opportunities remain, so long-term investors should certainly take note of FirstService stock in their portfolios.
