KeyBanc, DA Davidson Bump Up Federal Signal Price Target Post Q3 Results
- KeyBanc analyst Steve Barger raised the price target on Federal Signal Corp (NYSE: FSS) to $55 (an upside of 16%) from $44 and maintained an Overweight rating on the shares.
- The analyst notes shares increased following its Q3 results despite a revenue miss and guide down. He thinks investors were willing to look through results because strong orders drove backlog up 52% year-over-year.
- Barger believes Federal Signal is well-positioned to benefit from the recently passed infrastructure bill, which could drive future sales or rentals of dump trucks and trailers, safe digging trucks, road marking equipment, sewer cleaners, and street sweepers.
- The analyst acknowledges shares are trading above historical valuation ranges but expects upside to his model from organic growth and M&A.
- DA Davidson analyst Michael Shlisky raised the price target to $47 from $45 and maintained a Neutral rating on the shares.
- Recently, Federal Signal reported Q3 results with Adjusted EPS of $0.48, beating consensus of $0.46 and Sales of $298.3 million (+7% year-over-year), missing the consensus of $325.50 million.
- Orders increased 32% Y/Y to $350 million. Backlog was at $487 million, an increase of 60% from the end of last year.
- The operating margin was 11.5%, compared to 12.2% in the prior-year quarter.
- Adjusted EBITDA increased by 3% Y/Y to $47.4 million, and the margin was 15.9% versus 16.4% last year.
- Operating activities provided net cash of $16 million during the quarter, bringing the total year-to-date operating cash generation to $55 million.
- FY21 Outlook: The company slashed its adjusted EPS outlook to $1.68 - $1.78 (prior outlook $1.78 - $1.90) against the consensus of $1.85.
- Price Action: FSS shares closed lower by 0.25% at $47.2 on Wednesday.
Latest Ratings for FSS
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Mar 2022 | Raymond James | Maintains | Strong Buy | |
| Mar 2022 | Keybanc | Maintains | Overweight | |
| Jan 2022 | Raymond James | Maintains | Strong Buy |
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