NYSE:FSS

Stock Analysis Report

Executive Summary

Federal 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.

Rewards

Trading at 22.7% below its fair value

Earnings are forecast to grow 7.16% per year

Earnings grew by 22.1% over the past year

Risk Analysis

Has a high level of debt



Snowflake Analysis

Solid track record and fair value.


Similar Companies

Share Price & News

How has Federal Signal's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FSS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

5.0%

FSS

1.1%

US Machinery

1.2%

US Market


1 Year Return

59.0%

FSS

19.2%

US Machinery

24.2%

US Market

Return vs Industry: FSS exceeded the US Machinery industry which returned 22.4% over the past year.

Return vs Market: FSS exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

FSSIndustryMarket
7 Day5.0%1.1%1.2%
30 Day7.6%1.0%3.5%
90 Day3.8%8.6%11.7%
1 Year60.8%59.0%21.4%19.2%26.9%24.2%
3 Year135.0%125.6%46.1%36.7%53.0%43.2%
5 Year136.8%119.1%77.0%55.6%75.3%56.0%

Price Volatility Vs. Market

How volatile is Federal Signal's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Federal Signal undervalued compared to its fair value and its price relative to the market?

18.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FSS ($32.85) is trading below our estimate of fair value ($42.5)

Significantly Below Fair Value: FSS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FSS is good value based on its PE Ratio (17.8x) compared to the Machinery industry average (23.4x).

PE vs Market: FSS is good value based on its PE Ratio (17.8x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: FSS is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: FSS is overvalued based on its PB Ratio (3.3x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Federal Signal forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

7.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FSS's forecast earnings growth (7.2% per year) is above the savings rate (1.7%).

Earnings vs Market: FSS's earnings (7.2% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: FSS's earnings are forecast to grow, but not significantly.

Revenue vs Market: FSS's revenue (6.9% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: FSS's revenue (6.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FSS's Return on Equity is forecast to be low in 3 years time (15.3%).


Next Steps

Past Performance

How has Federal Signal performed over the past 5 years?

11.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FSS has high quality earnings.

Growing Profit Margin: FSS's current net profit margins (9.3%) are higher than last year (8.6%).


Past Earnings Growth Analysis

Earnings Trend: FSS's earnings have grown by 11.8% per year over the past 5 years.

Accelerating Growth: FSS's earnings growth over the past year (22.1%) exceeds its 5-year average (11.8% per year).

Earnings vs Industry: FSS earnings growth over the past year (22.1%) exceeded the Machinery industry 9.6%.


Return on Equity

High ROE: FSS's Return on Equity (18.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Federal Signal's financial position?


Financial Position Analysis

Short Term Liabilities: FSS's short term assets ($380.2M) exceed its short term liabilities ($164.0M).

Long Term Liabilities: FSS's short term assets ($380.2M) do not cover its long term liabilities ($405.4M).


Debt to Equity History and Analysis

Debt Level: FSS's debt to equity ratio (41.2%) is considered high.

Reducing Debt: FSS's debt to equity ratio has increased from 17.7% to 41.2% over the past 5 years.

Debt Coverage: FSS's debt is well covered by operating cash flow (32%).

Interest Coverage: FSS's interest payments on its debt are well covered by EBIT (17.7x coverage).


Balance Sheet

Inventory Level: FSS has a high level of physical assets or inventory.

Debt Coverage by Assets: FSS's debt is covered by short term assets (assets are 1.5x debt).


Next Steps

Dividend

What is Federal Signal's current dividend yield, its reliability and sustainability?

0.92%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years0.9%

Current dividend yield vs market & industry

Notable Dividend: FSS's dividend (0.97%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: FSS's dividend (0.97%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: FSS's dividend payments have been volatile in the past 10 years.

Growing Dividend: FSS's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (17.3%), FSS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FSS's dividends in 3 years are forecast to be well covered by earnings (16.5% payout ratio).


Next Steps

Management

What is the CEO of Federal Signal's salary, the management and board of directors tenure and is there insider trading?

3.4yrs

Average management tenure


CEO

Jennifer Sherman (54yo)

4yrs

Tenure

US$4,428,346

Compensation

Ms. Jennifer L. Sherman has been the Chief Executive Officer, President and Director of Federal Signal Corporation since January 1, 2016. Ms. Sherman served as the Chief Operating Officer of Federal Signal ...


CEO Compensation Analysis

Compensation vs Market: Jennifer's total compensation ($USD4.43M) is about average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Jennifer's compensation has increased by more than 20% in the past year.


Management Age and Tenure

3.4yrs

Average Tenure

48.5yo

Average Age

Experienced Management: FSS's management team is considered experienced (3.4 years average tenure).


Board Age and Tenure

3.5yrs

Average Tenure

63.5yo

Average Age

Experienced Board: FSS's board of directors are considered experienced (3.5 years average tenure).


Insider Trading

Insider Buying: FSS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$1,343,08012 Nov 19
Dennis Martin
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares40,000
Max PriceUS$33.58
SellUS$295,04208 Aug 19
Richard Mudge
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$29.50
SellUS$1,449,54805 Aug 19
Dennis Martin
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares47,734
Max PriceUS$30.37
SellUS$1,491,93007 Mar 19
Dennis Martin
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares60,000
Max PriceUS$24.87

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Mark Weber (61yo)

    Senior VP & COO

    • Tenure: 2yrs
    • Compensation: US$1.56m
  • Jennifer Sherman (54yo)

    President

    • Tenure: 4yrs
    • Compensation: US$4.43m
  • Ian Hudson (43yo)

    Senior VP & CFO

    • Tenure: 2.8yrs
    • Compensation: US$1.32m
  • Mike Higgins

    VP & GM of Elgin Sweeper Company

    • Compensation: US$546.55k
  • Svetlana Vinokur (39yo)

    VP of Corporate Development & Treasurer

    • Tenure: 4.8yrs
  • Dan DuPré (62yo)

    VP, General Counsel & Secretary

    • Tenure: 4.2yrs
    • Compensation: US$823.29k
  • Lauren Elting (37yo)

    VP & Corporate Controller

    • Tenure: 2.8yrs

Board Members

  • Gene Lowe (51yo)

    Independent Director

    • Tenure: 0.9yrs
  • John Workman (67yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$190.03k
  • Richard Mudge (73yo)

    Independent Director

    • Tenure: 9.8yrs
    • Compensation: US$178.03k
  • Dennis Martin (68yo)

    Non-Executive Chairman

    • Tenure: 3.1yrs
    • Compensation: US$241.50k
  • Brenda Reichelderfer (60yo)

    Lead Independent Director

    • Tenure: 1yrs
    • Compensation: US$187.00k
  • Jennifer Sherman (54yo)

    President

    • Tenure: 4yrs
    • Compensation: US$4.43m
  • Pat Miller (51yo)

    Independent Director

    • Tenure: 1.1yrs
    • Compensation: US$3.04k
  • Bill Owens (69yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: US$182.03k

Company Information

Federal Signal Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Federal Signal Corporation
  • Ticker: FSS
  • Exchange: NYSE
  • Founded: 1901
  • Industry: Construction Machinery and Heavy Trucks
  • Sector: Capital Goods
  • Market Cap: US$2.108b
  • Shares outstanding: 60.51m
  • Website: https://www.federalsignal.com

Number of Employees


Location

  • Federal Signal Corporation
  • 1415 West 22nd Street
  • Suite 1100
  • Oak Brook
  • Illinois
  • 60523
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FSSNYSE (New York Stock Exchange)YesCommon StockUSUSDFeb 1969
FSGDB (Deutsche Boerse AG)YesCommon StockDEEURFeb 1969

Biography

Federal 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 two segments, Environmental Solutions Group and Safety and Security Systems Group. The Environmental Solutions Group segment offers a range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks, water blasting equipment, dump truck bodies, and trailers under the Elgin, Vactor, Guzzler, Westech, Jetstream, Ox Bodies, Crysteel, J-Craft, Duraclass, Rugby, and Travis brand names. It also offers refuse and recycling collection vehicles, camera systems, ice resurfacing equipment, and snow-removal equipment. 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 campus and community alerting, emergency vehicles, first responder interoperable communications, and industrial communications, as well as command and municipal networked security. Its products include vehicle lightbars and sirens, public warning sirens, general alarm systems, public address systems, and public safety software. This segment sells its products under the Federal Signal, Federal Signal VAMA, and Victor brands. 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/20 23:36
End of Day Share Price2020/01/17 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.