Federal Signal (FSS) AI Stock Analysis

• Market Cap: $6.55B
• Dividend Yield: 0.48%
• Average Volume (3M): 577.64K
• Price to Earnings (P/E): 31.7
• Beta (1Y): 1.23
• Revenue Growth: 7.85%
• EPS Growth: 15.78%
• Country: US
• Employees: 4,700
• Sector: Industrials
• Sector Strength: 94
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.76
• Shares Outstanding: 60,968,838
• 10 Day Avg. Volume: 707,877
• 30 Day Avg. Volume: 577,641
• PEG Ratio: -12.31
• Price to Book (P/B): 5.48
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 33.03
• Enterprise Value/Market Cap: 1.03
• Enterprise Value/Revenue: 0.91
• Enterprise Value/Gross Profit: 12.54
• Enterprise Value/Ebitda: 5.04
• 1Y Price Target: $111.67
• Price Target Upside: 3.90% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 78 Outperform
• Price Target: $112.00 ▲(4.21%Upside)

Federal Signal's strong financial performance and positive earnings call are the primary drivers of its stock score. The company's robust growth, profitability, and strategic initiatives are offset by valuation concerns and technical indicators suggesting overbought conditions. Continued focus on managing leverage and sustaining growth will be crucial for maintaining its positive trajectory.

Positive Factors

Market Expansion

Federal Signal’s market share expansion strategy is accelerating with ample opportunities even in its most penetrated product categories.

Order Growth

Robust demand trends are driving record order growth for the company.

Negative Factors

Dealer Network

The recent dealer turnover within Federal Signal’s exclusive channel has become an increasing cause of concern for some investors.

Valuation Concerns

Current valuation leads to a 'price for perfection' scenario, indicating a less favorable risk/reward situation.

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 makes money primarily through the sale of its diverse range of products and services within its two main business segments. The Environmental Solutions segment generates revenue through the manufacturing and sale of equipment used for infrastructure maintenance, such as street sweepers and sewer cleaners, often providing these to municipalities and industrial customers. The Safety and Security Systems segment contributes to revenue by offering products and solutions designed for communication and security, including public safety systems and alerting devices. The company also benefits from aftermarket parts and service offerings, providing ongoing support and maintenance for its equipment, thereby creating a recurring revenue stream. Strategic partnerships with local governments and industrial entities further support its revenue model, enhancing market reach and product adoption.

Federal Signal Financial Statement Overview

Summary

Federal Signal demonstrates strong financial health with consistent revenue growth, robust profitability, and effective cash management. The company maintains a solid financial structure despite minor concerns over net income fluctuations and increased debt levels.

Income Statement

Federal Signal has demonstrated consistent revenue growth, with a notable increase in total revenue from prior years. The gross profit and net profit margins have remained strong, signaling effective cost management and profitability. The EBIT and EBITDA margins further highlight the company's operational efficiency. However, the net income has seen a slight decline in the TTM (Trailing-Twelve-Months) period, indicating potential pressure on net earnings.

Balance Sheet

The company's balance sheet shows a robust equity base with a healthy equity ratio, reflecting financial stability. The debt-to-equity ratio is moderate, suggesting manageable leverage. Return on Equity (ROE) is strong, indicating efficient utilization of equity. However, the increase in total debt over the periods could pose long-term risks if not managed carefully.

Cash Flow

Federal Signal has shown strong cash flow generation, with consistent operating cash flow that exceeds net income, showcasing effective cash management. The free cash flow growth is impressive, supporting investment and financing activities. The company's ability to generate free cash flow relative to net income underscores operational efficiency. However, fluctuations in capital expenditures and investment cash flows warrant attention.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.86B	1.72B	1.43B	1.21B	1.13B
Gross Profit	533.00M	450.20M	344.90M	288.70M	293.60M
EBITDA	344.10M	283.10M	215.60M	171.60M	180.10M
Net Income	216.30M	157.40M	120.40M	100.60M	96.20M
Balance Sheet
Total Assets	1.77B	1.62B	1.52B	1.37B	1.21B
Cash, Cash Equivalents and Short-Term Investments	91.10M	61.00M	47.50M	40.50M	81.70M
Total Debt	252.40M	320.70M	388.40M	313.70M	233.70M
Total Liabilities	579.10M	618.60M	663.40M	582.10M	506.70M
Stockholders Equity	1.19B	1.00B	860.90M	784.00M	702.10M
Cash Flow
Free Cash Flow	190.70M	164.10M	18.80M	64.40M	106.50M
Operating Cash Flow	231.30M	194.40M	71.80M	101.80M	136.20M
Investing Cash Flow	-78.90M	-83.70M	-99.70M	-168.70M	-34.40M
Financing Cash Flow	-121.00M	-97.90M	35.50M	26.40M	-53.40M

Federal Signal Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 107.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 107.48 is below the 20-day moving average (MA) of 108.19, above the 50-day MA of 101.67, and above the 200-day MA of 91.42, indicating a bullish trend. The MACD of 2.09 indicates Positive momentum. The RSI at 58.61 is Neutral, neither overbought nor oversold. The STOCH value of 39.06 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
FSS	78 Outperform	$6.55B	31.73	18.78%	0.48%	7.85%	15.78%
CECO	76 Outperform	$1.19B	26.16	18.34%	―	8.89%	278.44%
ZWS	76 Outperform	$6.30B	38.28	10.49%	0.93%	3.22%	38.39%
ERII	75 Outperform	$758.08M	38.17	10.35%	―	10.93%	6.99%
ATMU	72 Outperform	$3.18B	17.36	95.48%	0.52%	1.43%	12.88%
Sector *	71 Outperform	¥269.20B	13.84	8.47%	2.89%	6.33%	13.01%
PCT	38 Underperform	$2.80B	―	-67.71%	―	―	-180.10%