Federal Signal (FSS) AI Stock Analysis

• Market Cap: $6.47B
• Dividend Yield: 0.53%
• Average Volume (3M): 449.97K
• Price to Earnings (P/E): 31.1
• Beta (1Y): 1.22
• Revenue Growth: 7.85%
• EPS Growth: 15.78%
• Country: US
• Employees: 4,700
• Sector: Industrials
• Sector Strength: 87
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.76
• Shares Outstanding: 60,968,838
• 10 Day Avg. Volume: 618,125
• 30 Day Avg. Volume: 449,968
• PEG Ratio: 1.22
• Price to Book (P/B): 3.03
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 28.68
• Enterprise Value/Market Cap: 0.49
• Enterprise Value/Revenue: 0.43
• Enterprise Value/Gross Profit: 5.84
• Enterprise Value/Ebitda: 2.35
• 1Y Price Target: $110.25
• Price Target Upside: 0.83% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 78 Outperform
• Price Target: $112.00 ▲(2.43%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

Demand and Orders

Demand remains strong with June being the highest order month in company history.

Financial Performance

Shares of FSS traded up nearly 8% after the company reported in-line first-quarter results and record orders across both the ESG and SSG segments.

Market Expansion

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

Negative Factors

Dealer Network Concerns

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

Valuation Concerns

Despite strong fundamentals, valuation is not inexpensive—FSS trades at ~13x NTM EV/EBITDA, which is above peers.

Federal Signal Business Overview & Revenue Model

Company Description

Federal Signal Corporation (FSS) is a leading global designer and manufacturer of products and integrated solutions for municipal, governmental, industrial, and commercial customers. The company operates in two main segments: Environmental Solutions and Safety and Security Systems. Its core products and services include street sweepers, sewer cleaners, industrial vacuum trucks, hydro-excavators, waterblasting equipment, and safety and security systems such as alert and notification systems, as well as public safety equipment and solutions.

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 solid financial health with strong revenue growth, profitability, and cash generation capabilities. Cost management and operational efficiency are apparent, but minor concerns exist with 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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.90B	1.86B	1.72B	1.43B	1.21B	1.13B
Gross Profit	540.20M	533.00M	450.20M	344.90M	288.70M	293.60M
EBITDA	339.50M	344.10M	283.10M	215.60M	171.60M	180.10M
Net Income	211.00M	216.30M	157.40M	120.40M	100.60M	96.20M
Balance Sheet
Total Assets	1.88B	1.77B	1.62B	1.52B	1.37B	1.21B
Cash, Cash Equivalents and Short-Term Investments	57.50M	91.10M	61.00M	47.50M	40.50M	81.70M
Total Debt	305.20M	252.40M	320.70M	388.40M	313.70M	233.70M
Total Liabilities	677.00M	579.10M	618.60M	663.40M	582.10M	506.70M
Stockholders Equity	1.20B	1.19B	1.00B	860.90M	784.00M	702.10M
Cash Flow
Free Cash Flow	198.90M	190.70M	164.10M	18.80M	64.40M	106.50M
Operating Cash Flow	236.70M	231.30M	194.40M	71.80M	101.80M	136.20M
Investing Cash Flow	-159.00M	-78.90M	-83.70M	-99.70M	-168.70M	-34.40M
Financing Cash Flow	-68.80M	-121.00M	-97.90M	35.50M	26.40M	-53.40M

Federal Signal Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 109.34
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 109.34 is above the 20-day moving average (MA) of 102.24, above the 50-day MA of 93.97, and above the 200-day MA of 90.13, indicating a bullish trend. The MACD of 3.60 indicates Negative momentum. The RSI at 77.34 is Negative, neither overbought nor oversold. The STOCH value of 90.19 is Negative, 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
CECO	80 Outperform	$1.01B	22.48	18.34%	―	8.89%	278.44%
FSS	78 Outperform	$6.47B	31.06	18.78%	0.53%	7.85%	15.78%
ZWS	76 Outperform	$6.29B	38.25	10.49%	0.96%	3.22%	38.39%
ATMU	72 Outperform	$3.08B	16.86	95.48%	0.54%	1.43%	12.88%
ERII	64 Neutral	$693.23M	35.35	10.35%	―	10.93%	6.99%
Sector *	64 Neutral	kr63.14B	12.40	1.54%	10.07%	0.04%	-3.90%
PCT	38 Underperform	$2.34B	―	-67.71%	―	―	-180.10%