Analyzing FirstService (FSV) and HFF (HF)

FirstService (NASDAQ: FSV) and HFF (NYSE:HF) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Earnings & Valuation

This table compares FirstService and HFF’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstService $1.48 billion 1.65 $33.59 million $1.24 55.06
HFF $517.43 million 3.33 $77.19 million $2.23 20.03

HFF has lower revenue, but higher earnings than FirstService. HFF is trading at a lower price-to-earnings ratio than FirstService, indicating that it is currently the more affordable of the two stocks.

Dividends

FirstService pays an annual dividend of $0.49 per share and has a dividend yield of 0.7%. HFF does not pay a dividend. FirstService pays out 39.5% of its earnings in the form of a dividend.

Profitability

This table compares FirstService and HFF’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FirstService 2.74% 24.16% 5.65%
HFF 15.20% 39.03% 8.30%

Risk and Volatility

FirstService has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, HFF has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.

Institutional and Insider Ownership

61.2% of FirstService shares are owned by institutional investors. Comparatively, 88.0% of HFF shares are owned by institutional investors. 5.7% of HFF shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for FirstService and HFF, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstService 0 6 0 0 2.00
HFF 1 2 0 0 1.67

FirstService currently has a consensus target price of $66.50, suggesting a potential downside of 2.59%. HFF has a consensus target price of $28.00, suggesting a potential downside of 37.32%. Given FirstService’s stronger consensus rating and higher probable upside, research analysts plainly believe FirstService is more favorable than HFF.

Summary

HFF beats FirstService on 10 of the 15 factors compared between the two stocks.

About FirstService

Firstservice Corporation is a provider of residential property management and other essential property services to residential and commercial customers. The Company operates through two segments: FirstService Residential and FirstService Brands. FirstService Residential is a property manager and provides ancillary services in the areas of on-site staffing, including building engineering and maintenance, full-service amenity management, security, concierge and front desk personnel, and landscaping; banking and insurance products, and energy conservation and management solutions. FirstService Brands provides essential property services to residential and commercial customers in North America through franchise networks and Company-owned locations. The principal brands in this division include Paul Davis Restoration, California Closets, Certa Pro Painters, Pillar to Post Home Inspectors, Floor Coverings International, College Pro Painters, Century Fire Protection and Service America.

About HFF

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

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