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It's been a sad week for Federal Signal Corporation (NYSE:FSS), who've watched their investment drop 13% to US$81.28 in the week since the company reported its annual result. It was a credible result overall, with revenues of US$1.9b and statutory earnings per share of US$3.50 both in line with analyst estimates, showing that Federal Signal is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Federal Signal
Following the latest results, Federal Signal's seven analysts are now forecasting revenues of US$2.04b in 2025. This would be a meaningful 9.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.8% to US$3.71. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.00b and earnings per share (EPS) of US$3.74 in 2025. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.
Even though revenue forecasts increased, there was no change to the consensus price target of US$104, suggesting the analysts are focused on earnings as the driver of value creation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Federal Signal, with the most bullish analyst valuing it at US$115 and the most bearish at US$90.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Federal Signal is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Federal Signal'shistorical trends, as the 9.9% annualised revenue growth to the end of 2025 is roughly in line with the 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.5% annually. So although Federal Signal is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.