Q3 Earnings Highs And Lows: Federal Signal (NYSE:FSS) Vs The Rest Of The Heavy Transportation Equipment Stocks
Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Federal Signal (NYSE:FSS) and its peers.
Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.
The 13 heavy transportation equipment stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 1.2%.
Thankfully, share prices of the companies have been resilient as they are up 8.3% on average since the latest earnings results.
Federal Signal (NYSE:FSS)
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE:FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Federal Signal reported revenues of $474.2 million, up 6.2% year on year. This print fell short of analysts’ expectations by 1.6%. Overall, it was a mixed quarter for the company with full-year EPS guidance exceeding analysts’ expectations but a miss of analysts’ backlog estimates.
"With our teams' continued focus on operational execution and serving our customers, our businesses were able to deliver 6% year-over-year organic net sales growth, double-digit earnings improvement, gross margin expansion, and a 200-basis point increase in adjusted EBITDA margin during the third quarter," commented Jennifer L. Sherman, President and Chief Executive Officer.
Federal Signal Total Revenue
Interestingly, the stock is up 15.7% since reporting and currently trades at $98.11.
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.
Cummins reported revenues of $8.46 billion, flat year on year, outperforming analysts’ expectations by 1.8%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates.
Cummins Total Revenue
The market seems happy with the results as the stock is up 15.9% since reporting. It currently trades at $377.48.
With its first trailer reportedly built on two sawhorses, Wabash (NYSE:WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Wabash reported revenues of $464 million, down 26.7% year on year, falling short of analysts’ expectations by 2.8%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Interestingly, the stock is up 15.1% since the results and currently trades at $19.63.
Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses.
Commercial Vehicle Group reported revenues of $171.8 million, down 30.4% year on year. This result lagged analysts' expectations by 22.6%. Overall, it was a disappointing quarter as it also produced full-year revenue guidance missing analysts’ expectations.
Commercial Vehicle Group had the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update among its peers. The stock is down 21.1% since reporting and currently trades at $2.43.
Helping build race cars at one point, Allison Transmission (NYSE:ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Allison Transmission reported revenues of $824 million, up 12% year on year. This print surpassed analysts’ expectations by 4.3%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ EBITDA estimates.
The stock is up 15.3% since reporting and currently trades at $115.31.
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), has fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty heading into 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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