FIRSTSERVICE CORP. $58.14

FIRSTSERVICE CORP. $58.14 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.7 million; Market cap: $2.1 billion; Dividend yield: 1.0%) completed the spinoff of its commercial real estate business—Colliers International Group—on June 2, 2015.

Now that the split is complete, FirstService is carrying on with its residential property management and its commercial and residential property-improvement services.

In the first quarter ended March 31, 2016, the company’s revenue rose 13.0%, to $307.6 million from $272.2 million a year earlier (all figures except share price in U.S. dollars).

Excluding Colliers and one-time items, earnings per share for the quarter jumped to $0.08 from $0.02. The results suggest the company is on target to make $1.50 U.S. a share for 2016—the second and third quarters are its busiest.

With the April 2016 payment, FirstService raised its quarterly dividend by 10.0%, to $0.11 U.S. from $0.10 U.S. The stock yields 1.0%.

The company’s outlook remains strong. The spinoff of Colliers International Group adds to its appeal. In our experience—and in most academic studies of the subject—the parent and spinoff generally do better than comparable firms for at least several years after they split.

However, the stock trades at a high 29.8 times the $1.50 U.S. a share FirstService will likely earn in 2016.

FirstService is a hold.

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