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Federal Signal Corp. (FSS)
NYSE:FSS
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Federal Signal
(NYSE:FSS)
Select Model
Select Model
Rating:78Outperform
Price Target:
$144.00
▲(20.98% Upside)
Federal Signal's strong financial performance, characterized by robust growth and operational efficiency, is complemented by positive earnings call guidance. Despite technical indicators suggesting a potential overbought condition and a high valuation, the company's overall outlook remains positive, driven by strong demand and strategic initiatives.
Positive Factors
Revenue Growth
Consistent revenue growth reflects a robust business model and strong market demand, supporting long-term financial stability and expansion.
Operational Efficiency
Improved margins indicate effective cost management and operational efficiency, enhancing profitability and competitive positioning.
Cash Flow Generation
Strong cash flow generation provides financial flexibility for growth investments and shareholder returns, supporting long-term strategic goals.
Negative Factors
Rising Corporate Expenses
Increased corporate expenses can pressure margins and reduce profitability, potentially impacting financial performance if not controlled.
Higher Tax Expense
Rising tax expenses reduce net income, affecting cash flow and potentially limiting funds available for reinvestment and growth.
Increased Debt Levels
Higher debt levels can strain financial resources and limit flexibility, posing risks to long-term financial health if not managed.
Federal Signal (FSS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.24B
Dividend Yield0.44%
Average Volume (3M)406.18K
Price to Earnings (P/E)33.1
Beta (1Y)1.17
Revenue Growth9.09%
EPS Growth9.64%
CountryUS
Employees4,700
SectorIndustrials
Sector Strength72
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)1.17
Shares Outstanding60,791,897
10 Day Avg. Volume547,881
30 Day Avg. Volume406,180
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue3.42
Enterprise Value/Gross Profit11.78
Enterprise Value/Ebitda17.96
Forecast
1Y Price Target
$130.50Price Target Upside9.64% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Federal Signal Business Overview & Revenue Model
Company DescriptionFederal 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 MoneyFederal Signal generates revenue through the sale of its diverse product offerings and services across its two main segments. The Emergency Response segment contributes significantly to its earnings by providing essential equipment used by law enforcement, fire, and emergency medical services. This includes sirens, lights, and vehicle equipment. The Safety and Security segment focuses on providing products for the industrial market, including environmental monitoring systems and safety equipment. Key revenue streams also include maintenance and service contracts, which offer ongoing support for installed products. The company benefits from partnerships with government agencies, municipalities, and private sector clients, enhancing its reach and reliability in the market. Additionally, Federal Signal invests in innovation and technology, which helps to maintain a competitive edge and attract new customers.
Federal Signal Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
Federal Signal Corporation reported a strong financial quarter with significant growth in sales, operating income, and EBITDA across both major segments. The company successfully executed strategic initiatives and increased its guidance for 2025, demonstrating confidence in continued growth. Despite some increased expenses and external uncertainties related to tariffs, the overall performance and outlook remain robust.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Federal Signal Corporation reported a 15% year-over-year net sales growth, with consolidated net sales reaching $565 million. Operating income improved by 20%, and adjusted EBITDA increased by 21% compared to last year.
Record-Setting Orders and Backlog
Customer demand remained strong with orders totaling $540 million, a 14% increase from last year, resulting in a backlog of $1.08 billion.
Environmental Solutions Group (ESG) Growth
ESG's net sales increased by 18%, and adjusted EBITDA grew by 26%. The group's adjusted EBITDA margin improved by 150 basis points to 23.1%.
Safety and Security Systems Group (SSG) Performance
SSG achieved 3% top-line growth and a 17% increase in adjusted EBITDA, with a 320 basis point improvement in adjusted EBITDA margin.
Increased Guidance for 2025
The company raised its full-year adjusted EPS outlook to $3.92 to $4.10 and its net sales outlook to $2.07 billion to $2.13 billion.
Successful Execution of Strategic Initiatives
Federal Signal highlighted success in its 'good, better, best' product strategy, channel optimization, and aftermarket growth, contributing to long-term growth.
Strong Cash Flow Generation
Cash from operations increased by 47% year-over-year, with $60 million generated in Q2, contributing to total cash from operations of $96 million in the first half of the year.
Negative Updates
Increased Corporate Operating Expenses
Corporate operating expenses for the quarter increased to $15.7 million from $10.1 million last year, primarily due to higher post-retirement expenses and increased stock compensation costs.
Higher Tax Expenses
The tax expense for the quarter was $22 million compared to $16.7 million in Q2 last year, with the effective tax rate increasing to 23.6% from 21.5%.
Impact of Tariff and Trade Policies
The company noted ongoing monitoring of tariff situations, particularly in the SSG segment, which could impact future margins.
Company Guidance
During the Federal Signal Corporation Second Quarter Earnings Conference Call, the company provided updated guidance for 2025. Notably, the guidance for full-year adjusted EPS was increased to a range of $3.92 to $4.10, up from the previous range of $3.63 to $3.90. Additionally, net sales guidance was revised to a range of $2.07 billion to $2.13 billion, compared to the prior range of $2.02 billion to $2.10 billion. The call also highlighted record-setting financial performance in Q2, with net sales reaching $565 million, a 15% increase year-over-year, and adjusted EBITDA rising by 21% to $118.2 million, translating to an adjusted EBITDA margin of 20.9%. The Environmental Solutions Group (ESG) reported 18% sales growth, while the Safety and Security Systems Group (SSG) achieved a 17% increase in adjusted EBITDA. The company continued to emphasize strong order intake, with second-quarter orders totaling $540 million, a 14% increase from the previous year, and a backlog of $1.08 billion. The guidance and performance metrics reflect Federal Signal's strategic initiatives and operational efficiencies, which have contributed to their financial success and forward-looking optimism.Federal Signal Financial Statement Overview
Summary
Federal Signal exhibits robust financial health with strong revenue and profit growth, efficient operational management, and solid cash flow generation. However, a moderate increase in leverage is noted, though equity levels remain strong.Income Statement
Federal Signal shows a strong financial performance with consistent revenue and profit growth. The Gross Profit Margin for TTM is 28.84%, and the Net Profit Margin is 11.22%, both of which indicate a healthy profitability level. Revenue has grown steadily from $1.13 billion in 2020 to $1.97 billion in TTM 2025, reflecting a robust business model. The EBIT and EBITDA margins also indicate operational efficiency.85
Very Positive
Balance Sheet
The company's debt-to-equity ratio for TTM is 0.23, suggesting moderate leverage, while the equity ratio stands at 65.86%, indicating strong equity backing. Return on equity is impressive at 17.56%, showcasing effective management of shareholder funds. However, total debt has increased over the years, which could be a potential concern if it continues to rise.78
Positive
Cash Flow
Federal Signal demonstrates strong cash flow management with a positive Free Cash Flow Growth Rate. The Operating Cash Flow to Net Income Ratio and Free Cash Flow to Net Income Ratio both indicate healthy cash flow generation relative to net income. Despite an increase in capital expenditure, the company maintains a strong free cash flow position.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.97B | 1.86B | 1.72B | 1.43B | 1.21B | 1.13B |
| Gross Profit | 573.40M | 533.00M | 450.20M | 344.90M | 288.70M | 293.60M |
| EBITDA | 376.20M | 341.70M | 283.10M | 215.90M | 172.50M | 175.10M |
| Net Income | 221.60M | 216.30M | 157.40M | 120.40M | 100.60M | 96.20M |
Balance Sheet | ||||||
| Total Assets | 1.92B | 1.77B | 1.62B | 1.52B | 1.37B | 1.21B |
| Cash, Cash Equivalents and Short-Term Investments | 64.70M | 91.10M | 61.00M | 47.50M | 40.50M | 81.70M |
| Total Debt | 296.20M | 252.40M | 320.70M | 388.40M | 313.70M | 233.70M |
| Total Liabilities | 653.80M | 579.10M | 618.60M | 663.40M | 582.10M | 506.70M |
| Stockholders Equity | 1.26B | 1.19B | 1.00B | 860.90M | 784.00M | 702.10M |
Cash Flow | ||||||
| Free Cash Flow | 226.50M | 190.70M | 164.10M | 18.80M | 64.40M | 106.50M |
| Operating Cash Flow | 255.80M | 231.30M | 194.40M | 71.80M | 101.80M | 136.20M |
| Investing Cash Flow | -150.20M | -78.90M | -83.70M | -99.70M | -168.70M | -34.40M |
| Financing Cash Flow | -90.30M | -121.00M | -97.90M | 35.50M | 26.40M | -53.40M |
Federal Signal Technical Analysis
Neutral
119.03
Price Trends
122.81
Negative
111.60
Positive
99.10
Positive
Market Momentum
-0.32
Positive
39.37
Neutral
18.05
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FSS, the sentiment is Neutral. The current price of 119.03 is below the 20-day moving average (MA) of 124.40, below the 50-day MA of 122.81, and above the 200-day MA of 99.10, indicating a neutral trend. The MACD of -0.32 indicates Positive momentum. The RSI at 39.37 is Neutral, neither overbought nor oversold. The STOCH value of 18.05 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FSS.
Federal Signal Risk Analysis
Federal Signal disclosed 21 risk factors in its most recent earnings report. Federal Signal reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Federal Signal Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $7.84B | 46.22 | 11.12% | 0.77% | 4.74% | 30.64% | |
79 Outperform | $3.70B | 19.89 | 81.62% | 0.46% | 1.53% | 8.93% | |
78 Outperform | $7.24B | 33.11 | 18.77% | 0.44% | 9.09% | 9.64% | |
76 Outperform | $1.74B | 34.41 | 17.58% | ― | 15.74% | 294.80% | |
74 Outperform | $815.00M | 37.07 | 13.03% | ― | 6.19% | 15.04% | |
38 Underperform | $2.33B | -7.71 | ― | ― | ― | -79.12% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
FSS
Federal Signal
119.03
26.11
28.10%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.