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Federal Signal
(NYSE:FSS)
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Rating:79Outperform
Price Target:
$143.00
▲(20.28% Upside)
Action:Reiterated
Date:07/31/26
The score is driven primarily by strong financial performance (rising revenues, improved margins, solid cash generation, and moderate leverage) and a constructive earnings outlook after guidance was raised with strong quarterly momentum and cash flow. Technicals are supportive with the stock trading above major moving averages. Valuation and income are the main constraints, with a higher P/E and low dividend yield, while backlog/mix-related headwinds temper the otherwise positive outlook.
Positive Factors
Recurring aftermarket revenue
A roughly 25% aftermarket share with 24% YoY growth builds durable, higher‑margin recurring revenue from parts, service, rentals and used-equipment. That installed-base leverage cushions new-equipment cyclicality and supports steady cash flow and margin resilience over multiple cycles.
Negative Factors
Backlog decline and elevated lead times
An ~$80M YoY backlog decline reduces revenue visibility and may signal near-term demand or mix shifts; management tied much of the drop to a planned third-party decline. Elevated lead times for some products also risk fulfillment delays, margin pressure, and uneven quarterly delivery patterns.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring aftermarket revenue
A roughly 25% aftermarket share with 24% YoY growth builds durable, higher‑margin recurring revenue from parts, service, rentals and used-equipment. That installed-base leverage cushions new-equipment cyclicality and supports steady cash flow and margin resilience over multiple cycles.
Read all positive factors
Federal Signal (FSS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.60B
Dividend Yield0.46%
Average Volume (3M)604.30K
Price to Earnings (P/E)26.6
Beta (1Y)0.98
Revenue Growth23.97%
EPS Growth28.96%
CountryUS
Employees5,800
SectorIndustrials
Sector Strength72
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)4.69
Shares Outstanding61,002,254
10 Day Avg. Volume467,388
30 Day Avg. Volume604,296
Financial Highlights & Ratios
PEG Ratio1.86
Price to Book (P/B)4.78
Price to Sales (P/S)3.03
P/FCF Ratio29.07
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$140.00Price Target Upside17.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)5
Revenue Forecast (FY)$2.63B
Federal Signal Business Overview & Revenue Model
Company Description
Federal Signal Corporation, operating through its various subsidiaries, specializes in the development, production, and distribution of an extensive range of products and integrated solutions. The company serves a diverse client base, including mu...
How the Company Makes Money
Federal Signal makes money primarily by selling specialized equipment, systems, and related parts and services through its two operating segments.
1) Environmental Solutions (equipment sales): A major portion of revenue comes from the sale of pur...
Federal Signal Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call conveyed strong, broad-based operational and financial momentum: double-digit top-line growth, record adjusted EBITDA and EPS, substantial cash generation, successful early integration of acquisitions, and an upward revision to full-year guidance. Headwinds included a lower backlog year-over-year driven by a planned Labrie decline, mix-driven margin pressure in SSG, modest increases in corporate costs, and some timing/market uncertainty in refuse and select municipal product lines. Overall, the positive drivers (growth, margins, cash flow, and guidance lift) materially outweighed the noted challenges.Positive Updates
Record Quarter: Revenue and Profit Growth
Consolidated net sales of $670.0M, up $106M or 19% YoY; consolidated operating income $118.2M, up $20.5M or 21% YoY; consolidated adjusted EPS $1.42, up $0.25 or 21% YoY.
Negative Updates
Backlog Decline Year-over-Year
Backlog at ~$1.0B, down approximately $80M or ~8% YoY, with ~$75M of the reduction tied to planned decline in third‑party Labrie refuse backlog discontinued in late 2025; third‑party Labrie backlog approx. $44M at quarter end.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Quarter: Revenue and Profit Growth
Consolidated net sales of $670.0M, up $106M or 19% YoY; consolidated operating income $118.2M, up $20.5M or 21% YoY; consolidated adjusted EPS $1.42, up $0.25 or 21% YoY.
Read all positive updates
Company Guidance
Federal Signal raised its full-year guidance, boosting adjusted EPS to $5.12–$5.30 (from $4.80–$5.05) and increasing net sales guidance to $2.58–$2.67 billion (from $2.57–$2.66 billion), while reaffirming capital expenditures of $45–$55 million; management expects a full-year effective tax rate of ~24% (ex discrete items), intends to continue a $0.15/share quarterly dividend (Q2 paid, Q3 announced), targets ~100% annual cash conversion, and still targets annual low‑double‑digit top‑line growth split roughly 50/50 between inorganic and organic growth; related operating metrics noted include a $1.0 billion backlog (with ~$44 million third‑party Labrie backlog and a ~$75 million year‑over‑year planned decline), aftermarket at ~25% of ESG revenue (expected to grow slightly faster than the company), roughly half of annual CapEx directed to growth, and an SSG adjusted EBITDA margin target range of 22%–28%.Federal Signal Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
78
Positive
Cash Flow
83
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.45B | 2.18B | 1.86B | 1.72B | 1.43B | 1.21B |
| Gross Profit | 699.90M | 612.80M | 533.00M | 450.20M | 344.90M | 288.70M |
| EBITDA | 459.70M | 419.10M | 341.70M | 283.10M | 215.90M | 172.50M |
| Net Income | 285.40M | 246.60M | 216.30M | 157.40M | 120.40M | 100.60M |
Balance Sheet | ||||||
| Total Assets | 2.44B | 2.39B | 1.77B | 1.62B | 1.52B | 1.37B |
| Cash, Cash Equivalents and Short-Term Investments | 62.80M | 63.70M | 91.10M | 61.00M | 47.50M | 40.50M |
| Total Debt | 485.80M | 594.60M | 252.40M | 320.70M | 388.40M | 313.70M |
| Total Liabilities | 932.40M | 1.01B | 579.10M | 618.60M | 663.40M | 582.10M |
| Stockholders Equity | 1.51B | 1.38B | 1.19B | 1.00B | 860.90M | 784.00M |
Cash Flow | ||||||
| Free Cash Flow | 339.20M | 227.10M | 190.70M | 164.10M | 18.80M | 64.40M |
| Operating Cash Flow | 372.50M | 254.70M | 231.30M | 194.40M | 71.80M | 101.80M |
| Investing Cash Flow | -495.70M | -527.90M | -78.90M | -83.70M | -99.70M | -168.70M |
| Financing Cash Flow | 121.40M | 244.50M | -121.00M | -97.90M | 35.50M | 26.40M |
Federal Signal Technical Analysis
Positive
118.89
Price Trends
116.31
Positive
114.48
Positive
114.29
Positive
Market Momentum
-0.20
Positive
50.98
Neutral
58.22
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 118.89 is below the 20-day moving average (MA) of 119.41, above the 50-day MA of 116.31, and above the 200-day MA of 114.29, indicating a bullish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 50.98 is Neutral, neither overbought nor oversold. The STOCH value of 58.22 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 42 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $7.60B | 26.64 | 20.22% | 0.49% | 23.97% | 28.96% | |
77 Outperform | $8.31B | 30.61 | 17.09% | 0.87% | 10.69% | 60.92% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $434.53M | 22.13 | 10.89% | ― | -3.05% | 4.46% | |
60 Neutral | $3.83B | 134.97 | 5.54% | ― | 32.11% | -71.47% | |
54 Neutral | $4.22B | 20.01 | 58.84% | 0.41% | 9.99% | 15.89% | |
47 Neutral | $1.26B | -5.05 | -408.05% | ― | 590.00% | -15.72% |
* Industrials Sector Average
FSS
Federal Signal
124.95
3.00
2.46%
CECO
Ceco Environmental
65.89
20.76
46.00%
ERII
Energy Recovery
8.65
-4.14
-32.37%
ZWS
Zurn Water Solutions
50.51
5.93
13.30%
PCT
PureCycle Technologies
6.37
-6.25
-49.52%
ATMU
Atmus Filtration Technologies, Inc.
51.63
14.26
38.16%
Federal Signal Corporate Events
Business Operations and StrategyFinancial Disclosures
Federal Signal Showcases Growth Strategy in New Investor Presentation
Positive
May 20, 2026
On May 20, 2026, Federal Signal posted new investor presentation materials outlining its financial profile and strategic positioning, highlighting that net sales have grown at a roughly 13% compound annual rate between 2016 and 2025, with organic ...
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.