Federal Signal (FSS) AI Stock Analysis

• Market Cap: $7.11B
• Dividend Yield: 0.49%
• Average Volume (3M): 426.18K
• Price to Earnings (P/E): 30.5
• Beta (1Y): 1.09
• Revenue Growth: 11.83%
• EPS Growth: 11.08%
• Country: US
• Employees: 4,700
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 1.14
• Shares Outstanding: 60,808,580
• 10 Day Avg. Volume: 311,042
• 30 Day Avg. Volume: 426,175
• PEG Ratio: 0.70
• Price to Book (P/B): 4.74
• Price to Sales (P/S): 3.02
• P/FCF Ratio: 29.50
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 3.65
• Enterprise Value/Gross Profit: 12.70
• Enterprise Value/Ebitda: 18.85
• 1Y Price Target: $112.00
• Price Target Upside: -2.19% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 4.61
• Revenue Forecast (FY): $2.46B

• Rating: 76 Outperform
• Price Target: $132.00 ▲(15.27% Upside)

The score is driven primarily by strong underlying financial performance and a bullish earnings update with raised full-year guidance and record order intake. Technicals are supportive but somewhat stretched, while valuation (high P/E and low yield) meaningfully tempers the overall rating.

Positive Factors

Low Financial Leverage

A very low debt-to-equity ratio and high equity share provide durable financial flexibility. This capital structure supports sustained investment in capex and M&A, reduces refinancing risk in downturns, and preserves the company's ability to fund growth initiatives without stressing liquidity.

Margin and Profitability Trends

Improving gross and stable net margins reflect durable operational improvements and pricing power across product lines. Higher margins support reinvestment, buffer cyclical volatility in municipal spending, and increase long-term cash flow generation capacity for strategic priorities.

Market Position and Recurring Demand

Leading share in specialty vehicles and safety products combined with publicly funded end-market exposure creates resilient, recurring demand. Strong aftermarket parts businesses and long-term municipal contracts underpin predictable revenue and justify continued investment in product and service capabilities.

Negative Factors

Free Cash Flow Weakness

A negative trend in free cash flow growth, if persistent, could constrain the company's ability to fund acquisitions, capex, dividends, or buybacks. Even with healthy cash conversion ratios, ongoing FCF contraction reduces financial optionality and warrants monitoring of operating working capital and capex execution.

Backlog Decline From Product Transition

A 4% backlog decline tied to transitioning refuse-truck offerings reduces near-term revenue visibility. Product platform migrations often span multiple quarters, creating timing risk for deliveries and complicating capacity planning, which can pressure short-to-medium-term organic growth despite strategic benefits.

Extended Lead Times in Key Lines

Very long lead times in certain product lines signal supply-chain or capacity constraints that can delay revenue realization and strain customer relationships. These structural fulfilment issues may require sustained investment in manufacturing or supply chain changes before throughput and service levels normalize.

Federal Signal Business Overview & Revenue Model

Company Description

Federal Signal Corporation, together with its subsidiaries, designs, manufactures, and supplies a suite of products and integrated solutions for municipal, governmental, industrial, and commercial customers in the United States, Canada, Europe, and internationally. It operates through Environmental Solutions Group, and Safety and Security Systems Group. The Environmental Solutions Group segment offers a range of street sweepers, safe-digging trucks ,sewer cleaners, industrial vacuum loaders, vacuum, and hydro-excavation trucks; road-marking, line-removal and waterblasting equipment, dump truck bodies, trailers, and metal extraction support equipment under the Elgin, Vactor, Guzzler, TRUVAC, Westech, Jetstream, Mark Rite Lines, Ox Bodies, Crysteel, J-Craft, Duraclass, Rugby, Travis, OSW, NTE, WTB, Ground Force, Bucks, and Switch-N-Go brand names. It also offers refuse and recycling collection vehicles, camera systems, ice resurfacing equipment, and snow-removal equipment, as well as safety, and security systems. In addition, this segment engages in the sale of parts, service and repair, equipment rental, and training activities. The Safety and Security Systems Group segment provides systems and products for community alerting, emergency vehicles, first responder interoperable communications, and industrial communications. Its products include vehicle lightbars and sirens, industrial signaling equipment, public warning systems, general alarm systems, and public address systems. This segment sells its products under the Federal Signal, Federal Signal VAMA, and Victor brand names. The company sells its products through wholesaler, distributor, independent manufacturer representative, original equipment manufacturer, and direct sales force, as well as independent foreign distributor. Federal Signal Corporation was founded in 1901 and is headquartered in Oak Brook, Illinois.

How the Company Makes Money

Federal Signal generates revenue through the sale of its diverse range of products and services across its two primary segments. Key revenue streams include the sale of emergency warning systems, industrial cleaning equipment, and environmental services. The company benefits from long-term contracts with municipalities and government agencies, providing a stable income source. Additionally, FSS engages in partnerships with other technology firms to integrate advanced solutions, which helps to increase market presence and sales. The company's focus on research and development also allows it to innovate and introduce new products that meet evolving market needs, further contributing to its earnings.

Federal Signal Financial Statement Overview

Summary

Federal Signal demonstrates strong financial health with consistent revenue growth and profitability. The company maintains a stable balance sheet with low leverage and effective equity utilization. While cash flow generation is robust, the recent decline in free cash flow growth is a point to monitor.

Income Statement

Federal Signal has demonstrated strong revenue growth with a TTM increase of 4.09% and consistent profitability, as evidenced by a solid gross profit margin of 29.04% and a net profit margin of 11.22%. The EBIT and EBITDA margins are healthy at 15.37% and 19.05%, respectively, indicating efficient operational management. The company has shown a positive revenue growth trajectory over the years, contributing to its high income statement score.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.23, reflecting prudent financial leverage. The return on equity is robust at 18.97%, showcasing effective use of shareholder funds to generate profits. The equity ratio stands at 68.19%, indicating a strong equity base relative to total assets. While the balance sheet is stable, the score is slightly moderated by the need for continued equity growth to support expansion.

Cash Flow

Federal Signal's cash flow performance is solid, with an operating cash flow to net income ratio of 0.97, indicating strong cash generation relative to net income. However, the free cash flow growth rate has declined by 3.00% in the TTM, which slightly impacts the cash flow score. The free cash flow to net income ratio of 0.89 suggests efficient cash conversion, but the recent decline in free cash flow growth warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.06B	1.86B	1.72B	1.43B	1.21B	1.13B
Gross Profit	590.00M	533.00M	450.20M	344.90M	288.70M	293.60M
EBITDA	397.70M	341.70M	283.10M	215.90M	172.50M	175.10M
Net Income	235.80M	216.30M	157.40M	120.40M	100.60M	96.20M
Balance Sheet
Total Assets	1.94B	1.77B	1.62B	1.52B	1.37B	1.21B
Cash, Cash Equivalents and Short-Term Investments	54.40M	91.10M	61.00M	47.50M	40.50M	81.70M
Total Debt	243.10M	252.40M	320.70M	388.40M	313.70M	233.70M
Total Liabilities	616.70M	579.10M	618.60M	663.40M	582.10M	506.70M
Stockholders Equity	1.32B	1.19B	1.00B	860.90M	784.00M	702.10M
Cash Flow
Free Cash Flow	219.70M	190.70M	164.10M	18.80M	64.40M	106.50M
Operating Cash Flow	248.10M	231.30M	194.40M	71.80M	101.80M	136.20M
Investing Cash Flow	-149.40M	-78.90M	-83.70M	-99.70M	-168.70M	-34.40M
Financing Cash Flow	-118.20M	-121.00M	-97.90M	35.50M	26.40M	-53.40M

Federal Signal Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 114.51
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FSS, the sentiment is Positive. The current price of 114.51 is above the 20-day moving average (MA) of 113.57, above the 50-day MA of 111.81, and above the 200-day MA of 108.25, indicating a bullish trend. The MACD of 1.29 indicates Negative momentum. The RSI at 60.38 is Neutral, neither overbought nor oversold. The STOCH value of 75.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FSS.

Federal Signal Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZWS	79 Outperform	$7.91B	42.07	11.76%	0.80%	6.88%	42.07%
FSS	76 Outperform	$7.11B	30.52	19.08%	0.49%	11.83%	11.08%
CECO	75 Outperform	$2.36B	47.36	18.85%	―	29.86%	331.33%
ATMU	71 Outperform	$4.66B	23.82	71.52%	0.39%	3.72%	11.71%
ERII	68 Neutral	$757.50M	42.02	9.41%	―	0.10%	1.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
PCT	55 Neutral	$2.00B	-8.16	-147.56%	―	―	12.57%

Federal Signal Corporate Events

Federal Signal completes acquisition of specialty vehicle maker

On January 16, 2026, Federal Signal Corporation completed its acquisition of Mega Corp., a leading manufacturer of specialty vehicles and equipment serving global metal extraction and construction markets, following the signing of a definitive agreement announced on December 18, 2025. The deal expands Federal Signal’s presence in the global metal extraction support equipment market, deepens its specialty vehicle platform by combining Mega with its existing Ground Force and TowHaul businesses, and is expected to strengthen its growth prospects through a complementary product portfolio, shared customer base and enhanced global reach, with management indicating the acquisition should be accretive to earnings and cash flow in 2026.

The most recent analyst rating on (FSS) stock is a Buy with a $133.00 price target. To see the full list of analyst forecasts on Federal Signal stock, see the FSS Stock Forecast page.

Federal Signal Highlights Growth, Investments in Investor Presentation

On January 14, 2026, Federal Signal Corporation posted an investor presentation to its website outlining its financial profile, business mix and recent strategic investments, including capacity expansions and acquisitions such as Hog Technologies and New Way, which will bolster its specialty vehicle platform but did not contribute to 2024 sales. The materials highlight that the company generated approximately $2.06 billion in last-twelve-month net sales through the third quarter of 2025, has delivered a roughly 13% net sales CAGR from 2016 to 2024 with average five-year cash conversion of 106%, maintains low leverage at 0.4x net debt to EBITDA, and holds top-tier market share positions across key vehicle and safety product categories, underscoring resilient, largely publicly funded end-market exposure and a disciplined capital deployment strategy focused on M&A, capex, dividends and share repurchases.

The most recent analyst rating on (FSS) stock is a Buy with a $123.00 price target. To see the full list of analyst forecasts on Federal Signal stock, see the FSS Stock Forecast page.

Federal Signal to Acquire Mega Corp in Cash Deal

On December 17–18, 2025, Federal Signal announced a definitive agreement to acquire Mega Corp., a leading manufacturer of specialty vehicles and equipment used in global metal extraction and construction markets, for $45.5 million in cash, including Mega’s manufacturing facility in Albuquerque, New Mexico. Mega, which generated about $40 million in net sales in 2024 with a sizable aftermarket parts business, will deepen Federal Signal’s presence in the metal extraction support equipment market and align with its existing Ground Force and TowHaul operations, with management highlighting opportunities to leverage complementary products, shared customers and expanded global reach. The deal, expected to close in the first quarter of 2026 subject to customary conditions, is projected to be accretive to Federal Signal’s earnings and cash flow in 2026 and will add approximately 95 Mega employees to the company, reinforcing its specialty vehicle platform and aftermarket service capabilities.

The most recent analyst rating on (FSS) stock is a Buy with a $124.00 price target. To see the full list of analyst forecasts on Federal Signal stock, see the FSS Stock Forecast page.

Federal Signal Completes Acquisition of New Way Trucks

On November 25, 2025, Federal Signal Corporation completed the acquisition of Scranton Manufacturing Company LLC, known as New Way Trucks, for an initial purchase price of $396 million, with additional consideration for real estate. This acquisition, which adds New Way’s expertise in refuse collection vehicles to Federal Signal’s portfolio, is expected to enhance growth and margins, despite being neutral to adjusted EPS in 2025 and 2026. The company has raised its full-year 2025 net sales and adjusted EPS outlooks, anticipating long-term value creation and EPS accretion by 2028.

The most recent analyst rating on (FSS) stock is a Hold with a $112.00 price target. To see the full list of analyst forecasts on Federal Signal stock, see the FSS Stock Forecast page.