CLARCOR (NYSE: CLC) and Federal Signal (NYSE:FSS) are both multi-sector conglomerates companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitabiliy and risk.

Earnings and Valuation

This table compares CLARCOR and Federal Signal’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CLARCOR N/A N/A N/A $2.84 29.23
Federal Signal $712.90 million 1.38 $76.90 million $0.69 23.78

Federal Signal has higher revenue and earnings than CLARCOR. Federal Signal is trading at a lower price-to-earnings ratio than CLARCOR, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for CLARCOR and Federal Signal, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CLARCOR 1 4 0 0 1.80
Federal Signal 0 0 2 0 3.00

CLARCOR currently has a consensus price target of $73.50, indicating a potential downside of 11.45%. Federal Signal has a consensus price target of $20.00, indicating a potential upside of 21.88%. Given Federal Signal’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Signal is more favorable than CLARCOR.

Institutional & Insider Ownership

86.9% of CLARCOR shares are held by institutional investors. Comparatively, 84.5% of Federal Signal shares are held by institutional investors. 3.0% of CLARCOR shares are held by company insiders. Comparatively, 3.8% of Federal Signal shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
CLARCOR 10.02% 11.49% 7.34%
Federal Signal 5.95% 11.98% 7.57%

Dividends

CLARCOR pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. Federal Signal pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. CLARCOR pays out 35.2% of its earnings in the form of a dividend. Federal Signal pays out 40.6% 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. CLARCOR has increased its dividend for 52 consecutive years and Federal Signal has increased its dividend for 2 consecutive years.

Volatility and Risk

CLARCOR has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Federal Signal has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500.

Summary

Federal Signal beats CLARCOR on 9 of the 14 factors compared between the two stocks.

About CLARCOR

CLARCOR Inc. is engaged in providing filtration products, filtration systems and services, and consumer and industrial packaging products. The Company’s segments are Engine/Mobile Filtration and Industrial/Environmental Filtration. Its Engine/Mobile Filtration segment manufactures and sells filtration products for on-road and off-road mobile and stationary applications. Its Industrial/Environmental Filtration segment manufactures and sells filtration products used in industrial and commercial processes, and in buildings and infrastructures of various types. Its liquid process filtration products include specialty industrial process liquid filters; filters for pharmaceutical processes and beverages; filtration systems, filters and coalescers for the oil and natural gas industry; filtration systems for aircraft refueling, anti-pollution, sewage treatment and water recycling; bilge water separators, and sand control filters for oil and gas drilling.

About Federal Signal

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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