Federal Signal Corporation (FSS) & Oshkosh Corporation (OSK) Critical Review

Oshkosh Corporation (NYSE: OSK) and Federal Signal Corporation (NYSE:FSS) are both heavy machinery & vehicles – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitability.

Earnings & Valuation

This table compares Oshkosh Corporation and Federal Signal Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Oshkosh Corporation $6.83 billion 0.93 $285.60 million $3.77 22.44
Federal Signal Corporation $707.90 million 1.77 $43.80 million $0.73 28.62

Oshkosh Corporation has higher revenue and earnings than Federal Signal Corporation. Oshkosh Corporation 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.

Volatility and Risk

Oshkosh Corporation has a beta of 1.87, indicating that its stock price is 87% more volatile than the S&P 500. Comparatively, Federal Signal Corporation has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Profitability

This table compares Oshkosh Corporation and Federal Signal Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oshkosh Corporation 4.18% 15.14% 6.54%
Federal Signal Corporation 5.30% 11.39% 5.64%

Analyst Ratings

This is a breakdown of current recommendations for Oshkosh Corporation and Federal Signal Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oshkosh Corporation 0 4 10 0 2.71
Federal Signal Corporation 0 0 2 0 3.00

Oshkosh Corporation presently has a consensus target price of $92.75, indicating a potential upside of 9.63%. Federal Signal Corporation has a consensus target price of $20.00, indicating a potential downside of 4.26%. Given Oshkosh Corporation’s higher probable upside, equities research analysts plainly believe Oshkosh Corporation is more favorable than Federal Signal Corporation.

Dividends

Oshkosh Corporation pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Federal Signal Corporation pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Oshkosh Corporation pays out 25.5% of its earnings in the form of a dividend. Federal Signal Corporation pays out 38.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oshkosh Corporation has raised its dividend for 2 consecutive years and Federal Signal Corporation has raised its dividend for 2 consecutive years.

Insider and Institutional Ownership

94.4% of Oshkosh Corporation shares are held by institutional investors. Comparatively, 81.7% of Federal Signal Corporation shares are held by institutional investors. 2.0% of Oshkosh Corporation shares are held by insiders. Comparatively, 4.2% of Federal Signal Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Oshkosh Corporation beats Federal Signal Corporation on 10 of the 16 factors compared between the two stocks.

About Oshkosh Corporation

Oshkosh Corporation is a manufacturer and marketer of access equipment, specialty vehicles and truck bodies for the primary markets of defense, concrete placement, refuse hauling, access equipment, and fire and emergency. The company’s brands include Oshkosh, JLG, Pierce, McNeilus, IMT, Frontline, Jerr-Dan, CON-E-CO and London. The Company operates through four segments: Access equipment, Defense, Fire & emergency and Commercial. The Access equipment segment provides aerial work platforms and telehandlers to position workers and materials at elevated heights. The Defense segment provides supply parts and services and wheeled vehicles. The Fire & Emergency segment manufactures and markets commercial and custom fire vehicles, simulators and emergency vehicles. The Commercial segment manufactures, markets and distributes concrete mixers, portable concrete batch plants, and vehicle and vehicle body components.

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.

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