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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Federal Signal Corporation and Navistar International Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Signal Corporation 0 0 2 0 3.00
Navistar International Corporation 2 7 3 0 2.08

Federal Signal Corporation presently has a consensus target price of $20.00, suggesting a potential upside of 12.99%. Navistar International Corporation has a consensus target price of $26.75, suggesting a potential downside of 0.56%. Given Federal Signal Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe Federal Signal Corporation is more favorable than Navistar International Corporation.

Dividends

Federal Signal Corporation pays an annual dividend of $0.28 per share and has a dividend yield of 1.6%. Navistar International Corporation 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Federal Signal Corporation 5.26% 9.75% 5.97%
Navistar International Corporation -2.66% N/A -2.88%

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federal Signal Corporation $712.90 million 1.48 $76.90 million $0.62 28.55
Navistar International Corporation $7.91 billion 0.33 $260.00 million ($2.46) -10.93

Navistar International Corporation has higher revenue and earnings than Federal Signal Corporation. Navistar International 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.

Institutional and Insider Ownership

84.1% of Federal Signal Corporation shares are owned by institutional investors. Comparatively, 82.4% of Navistar International Corporation shares are owned by institutional investors. 4.2% of Federal Signal Corporation shares are owned by company insiders. Comparatively, 21.8% of Navistar International Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Federal Signal Corporation has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Navistar International Corporation has a beta of 2.68, suggesting that its stock price is 168% more volatile than the S&P 500.

Summary

Federal Signal Corporation beats Navistar International Corporation on 10 of the 16 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 Navistar International Corporation

Navistar International Corporation is a holding company whose principal operating entities are Navistar, Inc. and Navistar Financial Corporation (NFC). The Company’s segments include Truck, Parts, Global Operations (collectively, Manufacturing operations) and Financial Services, which consists of NFC and its foreign finance operations (collectively, Financial Services operations). The Truck segment manufactures and distributes Class 4 through 8 trucks, buses and military vehicles under the International and IC Bus brands, along with production of engines. The Parts segment supports its brands of International commercial trucks, IC buses and engines. The Global Operations segment includes operations of its subsidiary, International Industria de Motores da America do Sul Ltda. (IIAA). The Financial Services segment provides and manages retail, wholesale and lease financing of products sold by the Truck and Parts segments and their dealers.

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