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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Federal Signal's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2026 was 16.57%.
As of today (2026-08-03), Federal Signal's WACC % is 12.60%. Federal Signal's ROIC % is 15.68% (calculated using TTM income statement data).
Federal Signal generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Federal Signal's WACC % is 12.60%. Federal Signal's ROIC % is 15.68% (calculated using TTM income statement data).
Federal Signal generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Federal Signal ROIC % Related Terms
Federal Signal ROIC % Historical Data
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The historical data trend for Federal Signal's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Farm & Heavy Construction Machinery subindustry, Federal Signal's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Federal Signal ROIC % vs Farm & Heavy Construction Machinery Industry
For the Farm & Heavy Construction Machinery industry and Industrials sector, Federal Signal's ROIC % distribution charts can be found below:
* The bar in red indicates where Federal Signal's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Jun. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Federal Signal (STU:FSG) has a ROIC % of 16.57% as of Jun. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Federal Signal and its competitors.
Is Federal Signal's ROIC % too high?
Federal Signal's current ROIC % is 16.57%. The Farm & Heavy Construction Machinery industry median ROIC % is 5.60. Federal Signal's value of 16.57% is 195.9% above this industry median. Overall, Federal Signal has a GF Score™ of 99/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Federal Signal's ROIC % compare to TEX and AGCO?
Federal Signal's ROIC % of 16.57% can be compared against companies in the Farm & Heavy Construction Machinery industry. The industry median ROIC % is 5.60. Federal Signal's value of 16.57% is 195.9% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Farm & Heavy Construction Machinery company?
The median ROIC % among Farm & Heavy Construction Machinery companies is 5.60, based on 207 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Federal Signal's current ROIC % of 16.57% is 195.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Federal Signal and its competitors. For the Farm & Heavy Construction Machinery industry, the median ROIC % is 5.60 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Federal Signal's current ROIC % is 16.57%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Federal Signal stock overvalued right now?
Based on GuruFocus' analysis, Federal Signal (STU:FSG) is currently considered Fairly Valued. The stock's GF Value™ is €106.46, compared to a current price of €107.00 — trading 0.5% above its estimated fair value. The current ROIC % is 16.57% and 195.9% above the Farm & Heavy Construction Machinery industry median of 5.60. Federal Signal's overall GF Score™ is 99/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Federal Signal (STU:FSG), the current ROIC % is 16.57% as of Jun. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Federal Signal (STU:FSG) Overvalued in 2026?
Based on GuruFocus' analysis, Federal Signal stock appears to be overvalued.
The current stock price of €107.00 is trading 0.5% above its estimated GF Value™ of €106.46.
GuruFocus considers Federal Signal to be Fairly Valued.
Key valuation signals for STU:FSG:
ROIC %: 16.57%
GF Value™: €106.46 vs. price of €107.00 (0.5% above fair value)
Industry Position: 195.9% above the Farm & Heavy Construction Machinery median
No single metric tells the full story. See the STU:FSG stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Federal Signal Corp designs and manufactures products and integrated solutions for municipal, governmental, industrial, and airport customers. It operates through two segments. The Environmental Solutions Group manufactures and supplies street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks, high-performance water blasting equipment, dump truck bodies, and trailers. The Safety and Security Systems Group manufactures and supplies comprehensive systems and products used by law enforcement, fire rescue, and industrial sites to protect people and property. Its offerings include systems for community alerting and industrial communications. The company generates the majority of its revenue from the Environmental Solutions Group segment.
99GF Score
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