Federal Signal Corporation (NYSE: FSS) and Wabco Holdings (NYSE:WBC) are both multi-sector conglomerates companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, risk and analyst recommendations.
Federal Signal Corporation pays an annual dividend of $0.28 per share and has a dividend yield of 1.5%. Wabco Holdings does not pay a dividend. Federal Signal Corporation pays out 42.4% of its earnings in the form of a dividend. Wabco Holdings has raised its dividend for 2 consecutive years.
Earnings and Valuation
This table compares Federal Signal Corporation and Wabco Holdings’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Federal Signal Corporation||$765.00 million||1.44||$84.40 million||$0.66||27.82|
|Wabco Holdings||$2.93 billion||2.50||$479.40 million||$6.00||22.78|
Wabco Holdings has higher revenue and earnings than Federal Signal Corporation. Wabco Holdings is trading at a lower price-to-earnings ratio than Federal Signal Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Federal Signal Corporation and Wabco Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Federal Signal Corporation||5.20%||10.59%||5.78%|
Insider & Institutional Ownership
81.4% of Federal Signal Corporation shares are owned by institutional investors. Comparatively, 96.4% of Wabco Holdings shares are owned by institutional investors. 4.2% of Federal Signal Corporation shares are owned by company insiders. Comparatively, 0.8% of Wabco Holdings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This is a summary of recent ratings and recommmendations for Federal Signal Corporation and Wabco Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Federal Signal Corporation||0||0||2||0||3.00|
Federal Signal Corporation currently has a consensus price target of $20.00, indicating a potential upside of 8.93%. Wabco Holdings has a consensus price target of $137.88, indicating a potential upside of 0.87%. Given Federal Signal Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Federal Signal Corporation is more favorable than Wabco Holdings.
Risk & Volatility
Federal Signal Corporation has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, Wabco Holdings has a beta of 1.65, indicating that its stock price is 65% more volatile than the S&P 500.
Wabco Holdings beats Federal Signal Corporation on 12 of the 17 factors compared between the two stocks.
About Federal Signal Corporation
Federal Signal Corporation designs, manufactures and supplies a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. The Company’s segments include the Environmental Solutions Group and the Safety and Security Systems Group. Its Environmental Solutions Group manufactures and supplies a range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks and waterblasting equipment. The products are sold to both municipal and industrial customers under the Elgin, Vactor, Guzzler and Jetstream brand names. Safety and Security Systems is a manufacturer and supplier of systems and products that law enforcement, fire rescue, emergency medical services, campuses military facilities and industrial sites use to protect people and property. It offers systems for campus and community alerting, emergency vehicles, first responder interoperable communications and industrial communications, among others.
About Wabco Holdings
WABCO Holdings Inc. is a supplier of electronic, mechanical, electro-mechanical and aerodynamic products for various manufacturers of commercial trucks, buses and trailers, as well as passenger cars. The Company engineers, develops, manufactures and sells braking, stability, suspension and transmission automation and air management systems primarily for commercial vehicles. Its products are pneumatic anti-lock braking systems, electronic braking systems, electronic stability control systems, brake controls, automated manual transmission systems, air disc brakes, and a range of conventional mechanical products, such as actuators, air compressors and air control valves for medium- and heavy-duty trucks, buses and trailers. The Company’s products also include air compressor and air processing/air management system; electronic and conventional air suspension systems; transmission automation; roll stability support; advanced driver assistance systems, and fleet management solutions.
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