Analysts Have Made A Financial Statement On Federal Signal Corporation's (NYSE:FSS) Annual Report

It's been a sad week for Federal Signal Corporation (NYSE:FSS), who've watched their investment drop 13% to US$81.28 in the week since the company reported its annual result. It was a credible result overall, with revenues of US$1.9b and statutory earnings per share of US$3.50 both in line with analyst estimates, showing that Federal Signal is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Federal Signal

Taking into account the latest results, the most recent consensus for Federal Signal from seven analysts is for revenues of US$2.04b in 2025. If met, it would imply a decent 9.9% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 4.8% to US$3.71. In the lead-up to this report, the analysts had been modelling revenues of US$2.00b and earnings per share (EPS) of US$3.74 in 2025. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of US$104, implying that the uplift in revenue is not expected to greatly contribute to Federal Signal's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Federal Signal analyst has a price target of US$115 per share, while the most pessimistic values it at US$90.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Federal Signal'shistorical trends, as the 9.9% annualised revenue growth to the end of 2025 is roughly in line with the 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.5% annually. So it's pretty clear that Federal Signal is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Federal Signal analysts - going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Federal Signal's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.