...

Federal Signal Corporation (FSS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

Popular:

Federal Signal Corporation (FSS)

View Full Profile →

Intrinsic Value (DCF)

Current$116.90
→
Intrinsic$87.87
-25%
$59.04$87.87$142.60
Market implies 28% growth for 5 years
FSS trades at a premium to our conservative estimate — investors expect above-average performance.
At $117, the market prices in continued strong cash flow growth (28%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $59 → Bull $143. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →16%18%20%22%
8%$108$117$127$137
10%$75$81$88$95
12%$57$61$66$72
14%$45$49$53$57

Bull Case

  • Bull case ($143) offers 22% upside at 24% growth, 9% discount

Bear Case

  • Bear case ($59) implies 49% downside at 16% growth, 12% discount
  • Price reflects 28% growth expectations vs 20% historical — high bar to clear
  • Trading 25% above base case — execution must exceed assumptions to justify
Loading charts...

5-Year Free Cash Flow Projection

Year 1$228.84M
Year 2$274.61M
Year 3$329.53M
Year 4$395.44M
Year 5$474.52M
Terminal$6.98B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$190.70MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Related Analysis

Full Stock ProfileCompare FSS vs AAPLStock Screener

Frequently Asked Questions

Is FSS stock undervalued or overvalued?
🔴 OVERVALUED

FSS trades at $116.90 vs. our DCF-derived intrinsic value of $87.87, implying -23% downside. Using a 10.0% WACC and 20.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($133.72) suggests limited upside.

What is FSS's intrinsic value?

Using a 5-year DCF model: Base FCF of $191M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $161M net debt and dividing by 0.06B shares: Bear $56.73 | Base $87.87 | Bull $133.72. Current price $116.90 implies -23% to base case.

How is FSS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($5.58B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.