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  5. FSV: I am somewhat confused and mystified. [FirstService Corporation]
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Q: I am somewhat confused and mystified....according to 3 sources I look at (including the company profile on 5i), the P/E for FSV is at 75. In an answer in early April you suggested the Forward P/E is 32.5; on April 25, you explained that while Revenue was up 14%, EPS was 67 cents down from 85 cents the prior year. 1. How does the Forward P/E drop by more than half when EPS went down? 2. You describe the results as good overall, yet the stock price continued to slide although it turned a bit at the beginning of this month: at this time do you see FSV as worth holding onto? Many thanks
Asked by Leonard on May 14, 2024
5i Research Answer:

Keep in mind forward P/E is not impacted in any way by reported earnings. It is what is expected over the next 12 months. So if growth is expected, P/E could decline even if weak earnings were just reported. In our answers we use Bloomberg forward estimates. Many sites use trailing 12-month earnings, which can vary significantly from forward estimates. FSV has been a very consistent long term performer and we continue to like it. It has created siginificant shareholder value in the last 15 years. FSV reports in US dollars so many sites often do not convert earnings forecasts, which of course impacts P/E ratios. 2025 EPS is estimated at $5.56, which is about $7.62 C$, which on a C$ 202 price equates to a P/E of 26.5X today, after a 4-day decline. 

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