KeyBanc has revised its rating for Federal Signal (FSS, Financial) from Overweight to Sector Weight, mainly due to valuation concerns as the stock has surged by 58% since early April. This adjustment positions Federal Signal as one of the priciest entities within the construction machinery sector, according to projections for 2026. Additionally, the firm notes that the order comparisons for Federal Signal present significant challenges, influencing the updated outlook.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Federal Signal Corp (FSS, Financial) is $108.60 with a high estimate of $120.00 and a low estimate of $96.00. The average target implies an downside of 3.96% from the current price of $113.08. More detailed estimate data can be found on the Federal Signal Corp (FSS) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Federal Signal Corp's (FSS, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Federal Signal Corp (FSS, Financial) in one year is $88.14, suggesting a downside of 22.06% from the current price of $113.08. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Federal Signal Corp (FSS) Summary page.
FSS Key Business Developments
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Federal Signal Corp (FSS, Financial) reported a 9% year-over-year increase in net sales, reaching $464 million for the quarter.
- The company achieved a 21% increase in consolidated operating income, amounting to $65.7 million.
- Record order intake was set at $568 million, a 13% increase compared to the previous year.
- Backlog reached an all-time high of $1.1 billion, providing strong visibility for future sales.
- The Environmental Solutions Group (ESG) reported a 17% increase in adjusted EBITDA, with margins expanding by 120 basis points to 20%.
Negative Points
- GAAP diluted EPS decreased to $0.75 per share from $0.84 per share in the same quarter last year.
- Tax expense increased significantly to $15.7 million, compared to a benefit of $700,000 in the prior year.
- The company faces potential challenges from global tariffs, although it has strategies in place to mitigate impacts.
- Despite strong performance, the macroeconomic environment remains uncertain, which could affect future growth.
- There is a need for continued investment in capacity and strategic initiatives to maintain growth momentum.
