FirstService Corporation (FSV): what the price assumes

In the published model solve dated 2026-Q2, anchored at $144.11, FirstService Corporation (FSV) is priced for +12.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/FSV

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.

Per-Model Detail (n=19)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• FirstService is two businesses: FirstService Brands, the larger of the two at roughly 58% of revenue, which does roofing, restoration, fire protection and painting, and FirstService Residential, the largest manager of residential communities in North America at about 42%.
• The engine of recent growth has stalled at the profit line: revenue rose 5% during 2025 to 5.50 billion dollars while operating earnings went from 337.5 million to 338.1 million, essentially unchanged.
• Second-quarter results landed on July 23, 2026 and showed the split plainly, with Residential organic revenue up 5% while Brands organic revenue fell 3% on reduced activity at Roofing Corp. of America.

Bull Case

Most companies in this neighbourhood get paid when something happens. Brokers earn a commission when a building changes hands; advisory firms bill when a client transacts. FirstService gets paid whether anything happens or not. Its Residential division manages residential communities under contract, and the fee arrives every month because somebody has to run the property. That single structural difference is what the whole bull case rests on, and it shows up where structural differences always show up, in the margin.

For the year ended December 31, 2025 the company earned operating income of 338.1 million dollars on revenues of 5.50 billion, a little over six cents on the revenue dollar. CBRE, the largest firm in the comparison set, converts 4.7% of its 42.17 billion dollars of trailing revenue into operating profit. JLL manages 4.4% on 26.76 billion. CWK also runs 4.4%. Only NMRK, at 8.0%, does better, and it does so on a fifth of the revenue base. The gap is not enormous in absolute terms. What matters is that FirstService earns it on recurring contracts rather than on deal flow, so the same margin arrives in a bad year.

The June 2026 quarter tested exactly that. Consolidated revenue grew 2% and the chief executive described conditions that "tempered organic growth", and yet Residential revenue rose 4%, organic growth in that division ran 5%, and division operating earnings reached 53.0 million dollars against 51.6 million a year earlier. New contract wins and expanded labour-related services drove it. In a genuinely soft quarter, the contracted half of the business kept compounding, which is precisely the property the recurring-revenue thesis claims.

The other half is more interesting than its reputation suggests. FirstService Brands is not a single business; it is fire protection, restoration, roofing and painting run under separate brands, some company-owned and some franchised. Century Fire Protection grew solidly through the same quarter that Roofing Corp. of America went backwards. A portfolio where the weak line and the strong line are in different end markets is a portfolio that does not need every market to cooperate at once.

Capital discipline sits behind it. Long-term debt fell to 1,082.7 million dollars at the end of 2025 from 1,298.7 million a year earlier, and net interest expense came down to 73.7 million from 82.9 million on the back of both lower average borrowings and a lower cost of funds. Net earnings reached 190.7 million dollars against 187.8 million, diluted earnings per share 3.17 against 2.97, and the dividend was 1.10 per share. The weighted average diluted share count moved from 45.28 million to 45.75 million, which for a company that acquires businesses continuously is close to no dilution at all.

The bear is right that operating earnings went sideways in 2025 and that the price is asking for considerably more than sideways. What the bull can say is that the flat year came with the balance sheet getting lighter, the recurring half accelerating, and the cyclical half doing what cyclical halves do.

Bear Case

The variable with the most leverage on this thesis is not competition or execution. It is whatever governs how much money North American property owners spend on repairing and improving their buildings, because that is what the larger half of this company sells. FirstService Brands, at roughly 58% of revenue, is roofing, restoration, fire protection and painting. Those are discretionary and insurance-driven capital decisions, and they arrive or do not arrive according to weather, claims activity, interest rates and the confidence of a property owner. None of that is on management's desk.

The June 2026 quarter showed what it looks like when the tap tightens. Brands revenue grew 1% in total but fell 3% on an organic basis, with reduced activity at Roofing Corp. of America offsetting growth at Century Fire Protection. The chief executive named "continued macroeconomic headwinds that tempered organic growth" and guided the back half of the year to be "similar or modestly better than our year-to-date performance". That is a company telling you the second half looks like the first half, and the first half produced consolidated revenue growth of 4% and diluted earnings per share of 1.43.

Set that against what the market is underwriting. Today's level embeds operating profit compounding at roughly 11.5% a year for a five-year stretch. The most recent full year delivered nothing of the sort: revenues rose 5% to 5.50 billion dollars while operating earnings moved from 337.5 million to 338.1 million. Five per cent more revenue produced two tenths of one per cent more profit. And the segment detail shows where it went: Brands operating earnings fell to 214.0 million dollars from 230.1 million on revenue that grew, so the division kept under seven cents of each revenue dollar where it had kept seven and a half the year before. Residential went the other way, improving to 170.4 million from 159.2 million while holding its own conversion steady. One division carried the year, and it is the smaller one.

The growth that did arrive was bought. The annual filing attributes the 2025 revenue increase to "the contribution of recent tuck-under acquisitions", and that model leaves a residue most readers never see: redeemable non-controlling interests of 486.2 million dollars sit on the balance sheet, the minority stakes retained by the operators of acquired businesses. Those are a genuine future claim on cash, and they do not appear in any earnings multiple. Against shareholders' equity of 1,376.0 million dollars, they are not a rounding item.

Leverage compounds the sensitivity rather than offsetting it. Net debt runs about 2.75 times operating profit, and the interest bill of 73.7 million dollars consumed more than a fifth of 2025 operating earnings. That is manageable in a flat year and it is not a solvency question. It is a question of what the equity does if the restoration and roofing cycle stays soft for two more years while the same fixed charges run and the acquisition pipeline keeps needing funding.

Finally, the valuation methods themselves split in a way that should give a buyer pause. The approaches that value what the company owns, and the approaches that capitalise what it currently earns with no growth credited at all, land far beneath today's level, in one case by a multiple rather than a margin. Only peer comparisons and the forward cash-flow builds reach it, and both of those are, by construction, arguments about the future. Roughly half of comparable fast-growing businesses held a pace like the one being asked here across five years. The other half is the bear case, and it does not require anything to go wrong. It only requires the last two quarters to be the shape of the next eight.

Valuation

The claim embedded in today's level is specific: operating profit compounding at about 11.5% a year over roughly a five-year stretch, on economics resembling the ones the business currently earns. Against FirstService's longer record that pace is not exotic. Against its most recent complete year it is a considerable step up, because operating earnings for the year ended December 31, 2025 came in at 338.1 million dollars against 337.5 million in 2024, on revenues that grew 5% to 5.50 billion. The gap between what happened and what is being paid for is the entire subject.

The methods sort themselves accordingly. Comparisons against other listed property-services firms reach the current level, and so do the forward cash-flow builds, one of which lands almost exactly on it. The approaches that value the balance sheet, and the one that capitalises current earnings while assuming no growth whatsoever, sit far beneath, and not by a technical margin: the zero-growth read is several multiples below. That is the standard signature of a business the market treats as a compounder, and it means the price is a claim on the next five years rather than an appraisal of the last one. There is no asset value underneath to catch a disappointment.

Where the business sits against its cohort sharpens the picture rather than settling it. FirstService converted a little over six cents of every revenue dollar into operating profit in 2025. CBRE converts 4.7% on 42.17 billion dollars of trailing revenue, JLL 4.4% on 26.76 billion, CWK 4.4% on 10.54 billion, and NMRK 8.0% on 3.48 billion. FirstService therefore earns more than the large brokerages and less than the smallest firm in the group, on revenue that is contracted rather than transactional. The recurring quality is the argument for the premium; the level of the margin is not.

The composition matters for how the growth assumption should be read. FirstService Brands is the larger revenue line at roughly 58% of the total, and it is the cyclical one; FirstService Residential is about 42%, and it is the contracted one. A growth assumption applied to the whole company is therefore mostly an assumption about roofing, restoration and fire protection demand. In the June 2026 quarter Residential organic revenue rose 5% while Brands organic revenue fell 3%. The two halves are not moving together, and the priced-in figure needs both.

Solvency sets the outer boundary and is comfortable rather than protective. Net debt runs about 2.75 times operating profit, long-term borrowings came down to 1,082.7 million dollars at the end of 2025 from 1,298.7 million, and net interest expense fell to 73.7 million from 82.9 million. Net earnings were 190.7 million dollars, diluted earnings per share 3.17, and the dividend 1.10 per share. Nothing there threatens the company. What it also does not do is underwrite the multiple: at this level the equity is supported by an expectation, and the balance sheet's contribution is simply that the expectation has time to prove itself.

Catalysts

Second-quarter results were released on July 23, 2026, with revenue of 1,449.2 million dollars against 1,415.7 million a year earlier, GAAP operating earnings of 99.7 million against 97.3 million, and GAAP diluted earnings per share of 1.00 against 1.01. The half-year figures were revenue of 2,766.3 million, operating earnings of 146.3 million against 136.5 million, and diluted earnings per share of 1.43 against 1.07. Profit is moving, top-line growth is not moving much.

The forward statement was unusually direct. Management said it expects top-line growth in the back half of the year to be "similar or modestly better than our year-to-date performance", having attributed the softness to macroeconomic conditions rather than to anything company-specific. That converts the next two prints into a test of a single question: whether Roofing Corp. of America's reduced activity is a cycle or a trend. Century Fire Protection was growing solidly in the same quarter, so the division's problem is located, not general.

Two structural items sit alongside. The company divested non-core residential aquatic operations serving single-family homes at the start of the June quarter, which is why Residential's reported revenue growth of 4% understated its organic growth of 5%; reported and organic should converge again once the divestiture laps. And in April 2026 the group entered an uncommitted receivables purchase agreement with Canadian Imperial Bank of Commerce covering FirstOnsite Restoration. A restoration business arranging to sell receivables is ordinary working-capital management, and it is also a reasonable place to watch for whether insurance-funded work is being paid on time.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CBRE (CBRE GROUP, INC.)
• FY2025 10-K: …and global competitors across all of our business lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition. We compete across a variety of business disciplines within the commercial real estate services and investment…
• FY2025 10-K: …and amortization expense decreased 6.3%, reflecting lower amortization expense due to intangible assets being fully amortized in 2024. 33 Table of Contents Real Estate Investments The following table summarizes our results of operations for our REI operating segment for the years ended December 31, 2025 and 2024…
• CIGI (Colliers International Group Inc.)
• FY2025 40-F: …administration expenses of the Company excluding stock-based compensation and restructuring, optimization and integration costs. It also includes an adjustment to remove the impact of gains attributable to MSRs. The CODM is not provided with total asset information by segment and does not consider total assets in…
• FY2025 40-F: Operating activities Net earnings $ 224,553 $ 236,936 Items not affecting cash: Depreciation and amortization 256,015 221,602 Gains attributable to mortgage servicing rights ( 31,237 ) ( 15,363 ) Gains attributable to the fair value of mortgage premiums and origination fees ( 24,207 ) ( 13,000 ) Deferred tax ( 16,044…
• CWK (CUSHMAN & WAKEFIELD LTD.)
• FY2025 10-K: …client relationships while moving up the value chain and capture market share in high-growth asset classes, such as data centers. We aim to bring data-driven insights to clients, providing the most insightful and forward-thinking solutions. In addition, we intend to continue investing in high-caliber talent, creating…
• FY2025 10-K: …or the loss of a significant number of key revenue-producing advisors, if we are unable to quickly hire and integrate qualified replacements, could materially adversely affect our business, financial condition and results of operations. Competition for these personnel is significant, and our industry is 13 Table of…
• JLL (Jones Lang LaSalle Incorporated)
• FY2025 10-K: …may indicate a rate of growth or decline that might not have been consistent with the real underlying rate of growth or decline in the local operations. Consequently, we provide information about the impact of foreign currencies in the period-to-period comparisons of the reported results of operations in our…
• FY2025 10-K: , monitoring and compliance reporting. As sustainability becomes increasingly central to real estate decision-making, our capabilities allow us to help clients navigate this evolving landscape, create meaningful career opportunities for our employees, and generate value for our shareholders. COMPETITION We operate…
• NMRK (NEWMARK GROUP, INC.)
• FY2025 10-K: …Real Estate Services Industry We operate in a highly competitive industry with numerous competitors, some of which may have greater financial and operational resources than we do. We compete to provide a variety of services within the commercial real estate industry. Each of these business disciplines is highly…
• FY2025 10-K: …than we are at growing through merger and acquisition activity. See the heading "Competition" under Part I, Item 1, Business for more information. In general, there can be no assurance that we will be able to continue to compete effectively with respect to any of our commercial real estate business lines or on an…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.