Federal Signal Gets A Green Light: Analyst Sees Widening Moat Against Competitors And More

KeyBanc Capital Markets analyst Steve Barger upgrades Federal Signal Corp FSS to Overweight from Sector Weight with a price forecast of $110.

The analyst says that following recent investor meetings, he is impressed by FSS’s strategic focus on specific competitors and its continuous efforts to enhance its competitive strengths.

The analyst anticipates solid organic growth driven by market share gains, R&D investments, pricing strategies and expanded original equipment (OE) and aftermarket offerings through its service center network, which facilitates customer acquisition.

Inorganically, Barger expects FSS to continue acquiring strong regional OEMs and leveraging its national footprint to distribute its products, thereby strengthening its portfolio of aspirational brands.

The analyst believes this combination, along with the culture of continuous improvement, could lead to robust revenue growth, improved profit margins and strong cash generation.

Going forward, successful execution of these strategies should make Federal Signal increasingly difficult for smaller competitors to challenge, adds the analyst.

The analyst’s positive outlook assumes the company can successfully increase truck production, as achieving its guidance necessitates record revenue quarters moving forward.

For 2025, the analyst raises its EPS estimates to $3.84 (from $3.80) versus consensus of $3.81 based on 12% revenue growth at an incremental margin of 24%.

For 2026, Barger boosts EPS estimates to $4.31 from $4.25 (versus cons $4.29), with revenue growth of 7% and 26% incremental margin.

FSS Price Action: Federal Signal Corp shares are up 4.41% at $93.51 at publication on Monday.

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