According to GuruFocus data, Chuck Royce (Trades, Portfolio) of Royce & Associate LLC increased his stake in Federal Signal Corporation (FSS, Financial), which designs products such as sewer cleaners and street sweepers for municipal customers, by purchasing1.56 million shares for $13.71 per share.
Business overview
With a market cap of $891.29 million, Federal Signal is not only ahead of its peers, but is a market leader in the industrial goods sector. Its products are categorized in three parts:
1) Environmental Solutions Group
2) Safety and Security System Group
3) Fire Rescue Group
Potential catalyst in every segment
Environmental Solutions:
Within the Environmental Solutions Group, Elgin is recognized as a market leader among several domestic sweeper competitors, and differentiates itself primarily on product performance. The Jetstream brand is a market leader in the in-plant cleaning segment of the U.S. waterblast industry, competing on product performance and rapid delivery.
Safety and Security System:
Within specific product categories and domestic markets, the brands within the Safety and Security Systems Group are among the leaders in the market. Some of the popular products of the company include Federal Signal, Federal Signal VAMA and Victor brand names.Â
Fire Rescue Group:
Within the Fire Rescue Group, Bronto Skylift is established as a global leader for aerial platforms used in firefighting, rescue and industrial applications. Bronto competes on product performance, where it holds technological advantages for its certified products in its designs, materials and production processes.
The stock has increased by 14% over the past year and traded around $14.30 per share after Monday's trading. This is higher than its October 2014 price.
Previous quarter performance
The second quarter was quite strong compared to the year-ago period; however, the company reported the top line of $230.80 million was down by 1.62% year over year. If we look at the chart below, Federal Signal's earnings were higher than its peers with the exception of Q3 2014.
Looking at the bottom line, net earnings came in at 29 cents per diluted share, a 2 cent increase from the year-ago quarter.
Dividend growth
The stock doesn’t seem lucrative to those investors who want growth, as the industrial good sector is yielding an average 2.31% dividend, while FSS' dividend is 1.68%.
Relative vauation
Federal Signal has a market cap of $891.21 million and an enterprise value of $868.37 million. It has a P/E of 12.81, lower than the industry median of 16.84.
With 6.4 million shares in his portfolio, Chuck Royce (Trades, Portfolio) is Federal Signal's leading guru shareholder. Others include Mario Gabelli and Joel Greenblatt.
Note:
The above stock chart is subject to copyright of Yahoo Finance
The dividend data is subject to copyright of dividend.com
The revenue data is subject to copyright of capitalcube.com
