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Federal Signal (FSS): Assessing Valuation After Strong Growth Outlook and Rising Investor Interest

Simply Wall St · 2d ago

Federal Signal (FSS) is drawing fresh attention after new data underscored its strong revenue trajectory and an expected pickup in demand, with earnings growth continuing to outpace sales and support the recent share price strength.

See our latest analysis for Federal Signal.

At a latest share price of $109.55, Federal Signal has eased off its recent highs after a softer 90 day share price return. That comes on top of an 18.75% year to date share price return and a 5 year total shareholder return of 254.30%, suggesting the market is still rewarding its growth story even as near term momentum cools.

If Federal Signal’s run has you thinking about where else quality industrial names might be building momentum, it is worth scanning aerospace and defense stocks for other specialized equipment players riding similar demand trends.

With earnings rising faster than sales and analysts still seeing upside to the current share price, investors face a key question: Is Federal Signal still undervalued, or is the market already pricing in its future growth?

Most Popular Narrative Narrative: 17% Undervalued

With Federal Signal closing at $109.55 against a most-followed fair value of $132, the narrative leans toward meaningful upside and frames an earnings driven rerating story.

Analysts expect earnings to reach $336.9 million (and earnings per share of $5.07) by about September 2028, up from $221.6 million today. In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.1x on those 2028 earnings, down from 33.9x today.

Read the complete narrative.

Curious how double digit growth, rising margins and a rich future earnings multiple can all coexist in one model? The narrative spells out the exact path, year by year, that bridges today’s profits to that higher valuation.

Result: Fair Value of $132 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside case could be challenged if municipal budgets tighten or if rivals outpace Federal Signal in electrification and advanced, lower cost technologies.

Find out about the key risks to this Federal Signal narrative.

Another Angle on Value

While the narrative suggests Federal Signal is 17% undervalued, its 28.3x price to earnings ratio sits above both the Machinery industry at 25.6x and peers at 16.8x, as well as a 25x fair ratio. That premium hints at less of a bargain and more of a quality mark up. The key question is how long investors will keep paying up.

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:FSS PE Ratio as at Dec 2025
NYSE:FSS PE Ratio as at Dec 2025

Build Your Own Federal Signal Narrative

If this perspective does not fully align with your own or you prefer to dig into the numbers yourself, you can build a custom narrative in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Federal Signal.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.