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Critical Review: Wabco Holdings (NYSE:WBC) vs. Federal Signal Corporation (FSS)

Wabco Holdings (NYSE: WBC) and Federal Signal Corporation (NYSE:FSS) are both auto/tires/trucks companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk. Dividends

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 45.2% of its earnings in the form of a dividend. Federal Signal Corporation has raised its dividend for 2 consecutive years.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Wabco Holdings £2.93 billion 2.55 £479.40 million £6.00 23.21
Federal Signal Corporation £712.90 million 1.55 £76.90 million £0.62 29.85

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. Risk & Volatility

Wabco Holdings has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Federal Signal Corporation has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Analyst Ratings

This is a summary of current recommendations and price targets for Wabco Holdings and Federal Signal Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wabco Holdings 1 3 7 0 2.55
Federal Signal Corporation 0 0 2 0 3.00

Wabco Holdings currently has a consensus target price of £133.67, indicating a potential downside of 4.02%. Federal Signal Corporation has a consensus target price of £20.00, indicating a potential upside of 8.05%. Given Federal Signal Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Signal Corporation is more favorable than Wabco Holdings.

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

Net Margins Return on Equity Return on Assets
Wabco Holdings 11.23% 40.21% 10.86%
Federal Signal Corporation 5.26% 9.75% 5.97%

Insider and Institutional Ownership

83.2% of Federal Signal Corporation shares are held by institutional investors.

0.8% of Wabco Holdings shares are held by company insiders. Comparatively, 4.2% of Federal Signal Corporation shares are held by company insiders.

Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth. Summary Wabco Holdings beats Federal Signal Corporation on 10 of the 17 factors compared between the two stocks.

About Wabco Holdings Wabco Holdings logoWABCO 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. About Federal Signal Corporation

Federal Signal Corporation logoFederal 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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References

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