Federal Signal Corporation (FSS)
Valuation Overview•Is Federal Signal Corporation Overvalued or Undervalued?
The market is pricing the stock in line with historical averages, assuming steady-state growth.
Moderate quality score of 72/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though profitability presents a headwind.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
FSS demonstrates strong business quality with robust profitability and healthy margins. This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company demonstrates solid revenue growth (15.0% 3Y CAGR) paired with highly explosive earnings growth (26.7% EPS 3Y CAGR). The company maintains healthy operational efficiency with a 16.7% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $625.6M | +17.1% | +15.0% | +14.0% | +11.0% | |
| EBITDA | $124.7M | — | +26.6% | — | — | |
| Net Income | $70.4M | +14.0% | +27.0% | — | +14.5% | |
| EPS (Diluted) | $1.14 | +14.6% | +26.7% | +20.8% | +14.9% | |
| Free Cash Flow | $94.6M | +19.1% | +129.4% | +16.4% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 28.4% | 27.6% | 26.1% | 26.0% |
| Operating Margin | 16.7% | 14.8% | 13.3% | 11.8% |
| Net Margin | 11.6% | 10.7% | 9.7% | 8.8% |
| FCF Margin | 12.4% | 10.1% | 7.4% | 6.9% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.88 | $1.18 | +33.5% | ||
| Q1'26 | $1.08 | $1.16 | +7.4% | ||
| Q4'25 | $1.07 | $1.14 | +6.5% | ||
| Q3'25 | $1.06 | $1.17 | +10.4% | ||
| Q2'25 | $0.73 | $0.76 | +4.1% | ||
| Q1'25 | $0.87 | $0.87 | +0.0% | ||
| Q4'24 | $0.84 | $0.88 | +4.8% | ||
| Q3'24 | $0.84 | $0.95 | +13.1% |
Total return is +17.9% (1Y), lagging the benchmark by -3.0%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +9.5% | +2.1% | — |
| 1Y | +17.9% | -3.0% | +0.6% |
| 3YCAGR | +25.7% | +5.2% | +2.5% |
| 5YCAGR | +25.3% | +13.2% | +5.7% |
| 10YCAGR | +25.8% | +11.1% | — |
The S&P 500 is at 30.6x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Federal Signal Corporation (FSS) valuation, health, and returns.
Federal Signal Corporation is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. trading near fair value (DCF: $106.12)
Federal Signal Corporation has multiple valuation anchors: DCF Intrinsic Value: $106.12 | Peer Relative Fair Value: $133.18 | Wall Street Analyst Target: $140.00 (implying +11.7% upside). A convergence of these signals offers higher conviction.
Federal Signal Corporation displays good financial health with a composite quality score of 72/100, supported by a Altman Z-Score of 6.7 (safe zone), Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 16.4%.
Federal Signal Corporation pays a 0.4% dividend yield, covered by a 14% payout ratio with 3 years of growth, supplemented by a 0.5% buyback yield.
Federal Signal Corporation's current growth trajectory is Accelerating. The company achieved +17.1% 1Y revenue growth and +14.6% 1Y EPS growth, compared to its 3Y revenue CAGR of +15.0%.
Wall Street consensus is Buy based on 11 analysts, beating EPS expectations in 92% of recent quarters with a 5-quarter streak. The consensus price target represents a +11.7% change from current levels.
Investment risks for Federal Signal Corporation include: -19.3% 1-year max drawdown. Volatility risk is characterized by a beta of 1.08x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.