Head-To-Head Survey: Wabash National (NYSE:WNC) versus Federal Signal (NYSE:FSS)

Federal Signal (NYSE:FSS) and Wabash National (NYSE:WNC) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Volatility and Risk

Federal Signal has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, Wabash National has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.

Insider and Institutional Ownership

92.7% of Federal Signal shares are owned by institutional investors. Comparatively, 97.0% of Wabash National shares are owned by institutional investors. 3.3% of Federal Signal shares are owned by insiders. Comparatively, 2.8% of Wabash National shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Federal Signal and Wabash National”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Signal	$2.18 billion	3.19	$246.60 million	$4.64	24.59
Wabash National	$1.54 billion	0.32	$211.45 million	($1.93)	-6.28

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

Dividends

Federal Signal pays an annual dividend of $0.60 per share and has a dividend yield of 0.5%. Wabash National pays an annual dividend of $0.32 per share and has a dividend yield of 2.6%. Federal Signal pays out 12.9% of its earnings in the form of a dividend. Wabash National pays out -16.6% 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. Federal Signal has increased its dividend for 3 consecutive years. Wabash National is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Federal Signal	11.66%	21.36%	13.07%
Wabash National	-5.48%	-36.59%	-10.27%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Federal Signal and Wabash National, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Signal	0	2	3	1	2.83
Wabash National	1	1	2	0	2.25

Federal Signal currently has a consensus target price of $140.50, indicating a potential upside of 23.15%. Wabash National has a consensus target price of $21.67, indicating a potential upside of 78.74%. Given Wabash National’s higher probable upside, analysts plainly believe Wabash National is more favorable than Federal Signal.

Summary

Federal Signal beats Wabash National on 13 of the 18 factors compared between the two stocks.

About Federal Signal

Federal Signal Corp. engages in the design and manufacture of products and integrated solutions for municipal, governmental, industrial, and commercial customers. It operates through the Environmental Solutions Group and Safety and Security Systems Group segments. The Environment Solutions Group segment is involved in the manufacture and supply of street sweeper vehicles, sewer cleaners, vacuum loader trucks, hydro-excavation trucks, and water blasting equipment. The Safety and Security Systems Group segment offers comprehensive systems and products that law enforcement, fire rescue, emergency medical services, campuses, military facilities, and industrial sites use to protect people and property. The company was founded in 1901 and is headquartered in Oak Brook, IL.

About Wabash National

Wabash National Corporation provides connected solutions for the transportation, logistics, and distribution industries primarily in the United States. The company operates through two segments, Transportation Solutions and Parts & Services. The Transportation Solutions segment designs and manufactures transportation-related equipment and products dry and refrigerated van trailers, platform trailers, tank trailers, and truck-mounted tanks; truck bodies for dry-freight transportation; cargo and cargo XL bodies for commercial applications; refrigerated truck bodies; platform truck bodies; and used trailers, as well as laminated hardwood oak flooring products. The Parts & Services segment provides aftermarket parts and services; steel flatbed bodies, truck body mounting, shelving for package delivery, partitions, roof racks, hitches, liftgates, thermal solutions, and others; truck body repair parts; and door repair and replacement, collision repair, and basic maintenance services. It also develops and scales a digital marketplace for the transportation and logistics distribution industry; operates a parts and services distribution platform; and stainless steel storage tanks and silos, mixers, and processors for the dairy, food and beverage, pharmaceutical, chemical, craft brewing, and biotech markets; trailers as a service; and composite products, including truck bodies, overhead doors, and other industrial application products, as well as used trailers. The company offers its products under the Wabash, DuraPlate, DuraPlateHD, DuraPlate AeroSkirt, and AeroSkirt CX brands, as well as EcoNex brand. It serves its products to truckload common carriers, leasing companies, private fleet carriers, less-than-truckload common carriers, and package carriers. Wabash National Corporation was founded in 1985 and is headquartered in Lafayette, Indiana.