Education
About Us
Working with TipRanks
Follow Us
Federal Signal Corp. (FSS)
NYSE:FSS
Top Page
Federal Signal
(NYSE:FSS)
Rating:78Outperform
Price Target:
$144.00
▲(15.72% Upside)
Positive Factors
Earnings
Shares of FSS traded up 18% after the company reported better-than-expected second-quarter results and continued order momentum.
Financial Performance
Management increased the company’s through-cycle EBITDA margin targets for both the ESG segment and the consolidated company.
Market Strategy
FSS has a unique, differentiated strategy, and its organic and inorganic initiatives aim to increase exposure to less-discretionary end markets.
Negative Factors
Dealer Network
The recent dealer turnover within Federal Signal’s exclusive channel has become an increasing cause of concern for some investors.
Risk/Reward Scenario
Current valuation leads to a 'price for perfection' scenario, indicating a less favorable risk/reward situation.
Valuation
FSS is considered one of the most expensive names based on 2026 estimates.
Federal Signal (FSS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.77B
Dividend Yield0.43%
Average Volume (3M)788.72K
Price to Earnings (P/E)35.5
Beta (1Y)1.15
Revenue Growth9.09%
EPS Growth9.64%
CountryUS
Employees4,700
SectorIndustrials
Sector Strength78
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)1.17
Shares Outstanding60,791,897
10 Day Avg. Volume714,746
30 Day Avg. Volume788,721
Financial Highlights & Ratios
PEG Ratio0.70
Price to Book (P/B)4.74
Price to Sales (P/S)3.02
P/FCF Ratio29.50
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue3.42
Enterprise Value/Gross Profit11.86
Enterprise Value/Ebitda18.83
Forecast
1Y Price Target
$131.50Price Target Upside5.67% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
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: 18.81%|
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call revealed a strong financial performance with record-setting results and significant year-over-year growth across key metrics. Despite some increases in expenses, the company's robust demand, strong order intake, and raised guidance for 2025 indicate a positive outlook.Q2-2025 Updates
Positive Updates
Record-Setting Q2 Financial Performance
Federal Signal achieved new quarterly records in net sales, operating income, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS.
Strong Year-Over-Year Growth
Consolidated net sales increased by 15%, operating income improved by 20%, and adjusted EBITDA rose by 21% compared to last year.
Robust Demand and Order Intake
Customer demand remained strong with orders of $540 million, a 14% increase year-over-year, marking the highest ever second quarter order intake for the company.
Environmental Solutions Group (ESG) Performance
ESG reported an 18% increase in net sales and a 26% rise in adjusted EBITDA, with a significant contribution from acquisitions and aftermarket offerings.
Safety and Security Systems Group (SSG) Success
SSG delivered a 3% top line growth, a 17% increase in adjusted EBITDA, and a 320 basis point improvement in margin, driven by proactive price/cost management and volume increases.
Cash Flow and Debt Management
Generated $60 million of cash from operations in Q2, a 47% increase year-over-year, with significant financial flexibility to invest in growth and return cash to stockholders.
Increased Guidance for 2025
The company raised its full-year adjusted EPS outlook to a range of $3.92 to $4.10 and net sales outlook to $2.07 billion to $2.13 billion.
Negative Updates
Increased Corporate Operating Expenses
Corporate operating expenses rose to $15.7 million from $10.1 million last year, mainly due to higher post-retirement expenses and increased stock compensation costs.
Higher Tax Expense
Tax expense for the quarter was $22 million, up from $16.7 million in the previous year, influenced by higher pretax income and the absence of a prior year tax benefit.
Interest and Other Expenses
There was a $300,000 increase in interest expense and a $400,000 increase in other expense, adding to the overall cost structure.
Company Guidance
During the Federal Signal Corporation's second quarter 2025 earnings call, the company increased its full-year guidance following record-setting financial results. The quarter saw a 15% year-over-year growth in net sales, reaching $565 million, and a 20% increase in operating income to $97.7 million. The adjusted EBITDA margin improved by 100 basis points to 20.9%, contributing to an adjusted EPS of $1.17, up 23% from the prior year. Orders rose by 14% to $540 million, while the backlog increased to $1.08 billion. Given these results, Federal Signal raised its full-year adjusted EPS outlook to between $3.92 and $4.10 and its net sales projection to between $2.07 billion and $2.13 billion. The company also updated its through-cycle EBITDA margin targets for the Environmental Solutions Group to 18-24% and the consolidated margin to 16-22%, reflecting confidence in ongoing strategic initiatives and market demand.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 | 569.60M | 533.00M | 450.20M | 344.90M | 288.70M | 293.60M |
| EBITDA | 358.80M | 344.10M | 283.10M | 215.60M | 171.60M | 180.10M |
| 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
Positive
124.44
Price Trends
110.75
Positive
97.06
Positive
94.04
Positive
Market Momentum
5.45
Negative
61.05
Neutral
56.29
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 124.44 is above the 20-day moving average (MA) of 119.50, above the 50-day MA of 110.75, and above the 200-day MA of 94.04, indicating a bullish trend. The MACD of 5.45 indicates Negative momentum. The RSI at 61.05 is Neutral, neither overbought nor oversold. The STOCH value of 56.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $7.77B | 35.54 | 18.77% | 0.43% | 9.09% | 9.64% | |
75 Outperform | $770.84M | 34.31 | 11.95% | ― | 6.19% | 15.04% | |
75 Outperform | $3.71B | 19.96 | 76.25% | 0.44% | 1.53% | 8.93% | |
74 Outperform | $1.58B | 31.16 | 19.67% | ― | 15.74% | 294.80% | |
70 Outperform | $7.61B | 44.86 | 10.81% | 0.78% | 4.74% | 30.64% | |
63 Neutral | $10.80B | 16.80 | 6.58% | 2.07% | 2.49% | -15.77% | |
38 Underperform | $2.40B | ― | -148.91% | ― | ― | -79.12% |
* Industrials Sector Average
Performance Comparison
FSS
Federal Signal
124.44
29.81
31.50%
CECO
Ceco Environmental
44.61
17.01
61.63%
ERII
Energy Recovery
14.18
-3.28
-18.79%
ZWS
Zurn Water Solutions
44.69
13.89
45.10%
PCT
PureCycle Technologies
13.30
7.63
134.57%
ATMU
Atmus Filtration Technologies, Inc.
43.45
9.77
29.01%
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.