At CA$198, Is It Time To Put FirstService Corporation (TSE:FSV) On Your Watch List?

While FirstService Corporation (TSE:FSV) might not have the largest market cap around , it saw significant share price movement during recent months on the TSX, rising to highs of CA$232 and falling to the lows of CA$198. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether FirstService's current trading price of CA$198 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FirstService’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for FirstService

What Is FirstService Worth?

According to our valuation model, the stock is currently overvalued by about 35%, trading at CA$198 compared to our intrinsic value of CA$146.42. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that FirstService’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of FirstService look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 86% over the next couple of years, the future seems bright for FirstService. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? FSV’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe FSV should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on FSV for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for FSV, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into FirstService, you'd also look into what risks it is currently facing. At Simply Wall St, we found 3 warning signs for FirstService and we think they deserve your attention.

If you are no longer interested in FirstService, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.