Here's What Analysts Are Forecasting For Federal Signal Corporation After Its Annual Results

It's been a sad week for Federal Signal Corporation (NYSE:FSS), who've watched their investment drop 13% to US$29.00 in the week since the company reported its annual result. Federal Signal reported US$1.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.76 beat expectations, being 3.2% higher than what analysts expected. 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've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.

View our latest analysis for Federal Signal

After the latest results, the five analysts covering Federal Signal are now predicting revenues of US$1.32b in 2020. If met, this would reflect an okay 7.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 5.4% to US$1.90. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.30b and earnings per share (EPS) of US$1.89 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

Analysts reconfirmed their price target of US$34.67, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Federal Signal, with the most bullish analyst valuing it at US$37.00 and the most bearish at US$33.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Federal Signal's performance in recent years. It's pretty clear that analysts expect Federal Signal's revenue growth will slow down substantially, with revenues next year expected to grow 7.7%, compared to a historical growth rate of 12% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.0% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkFederal Signal will grow faster than the wider market.

The Bottom Line

The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Federal Signal going out to 2024, and you can see them free on our platform here..

You can also see whether Federal Signal is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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