Posted by Jon Anderson on Aug 10th, 2018
Ford Motor (NYSE: F) and Federal Signal (NYSE:FSS) are both auto/tires/trucks companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, risk, dividends and institutional ownership.
This table compares Ford Motor and Federal Signal’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Ford Motor and Federal Signal’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ford Motor||$156.78 billion||0.25||$7.60 billion||$1.78||5.57|
|Federal Signal||$898.50 million||1.71||$61.60 million||$0.85||30.15|
Ford Motor has higher revenue and earnings than Federal Signal. Ford Motor is trading at a lower price-to-earnings ratio than Federal Signal, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Ford Motor has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Federal Signal has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.
Ford Motor pays an annual dividend of $0.60 per share and has a dividend yield of 6.1%. Federal Signal pays an annual dividend of $0.32 per share and has a dividend yield of 1.2%. Ford Motor pays out 33.7% of its earnings in the form of a dividend. Federal Signal pays out 37.6% 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. Ford Motor is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
55.5% of Ford Motor shares are owned by institutional investors. Comparatively, 85.3% of Federal Signal shares are owned by institutional investors. 1.0% of Ford Motor shares are owned by company insiders. Comparatively, 4.3% of Federal Signal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a breakdown of recent recommendations and price targets for Ford Motor and Federal Signal, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ford Motor presently has a consensus price target of $12.01, suggesting a potential upside of 21.16%. Given Ford Motor’s higher possible upside, research analysts clearly believe Ford Motor is more favorable than Federal Signal.
Ford Motor Company Profile
Ford Motor Company designs, manufactures, markets, and services a range of Ford cars, trucks, sport utility vehicles, and electrified vehicles; and Lincoln luxury vehicles worldwide. Its Automotive segment sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to fleet customers, including commercial fleet customers, daily rental car companies, and governments. The company’s Financial Services segment offers various automotive financing products to and through automotive dealers. Its financing products comprise retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, such as leasing companies, government entities, daily rental companies, and fleet customers. This segment also offers wholesale loans to dealers to finance the purchase of vehicle inventory; and loans to dealers to finance working capital and improvement of dealership facilities, purchase dealership real estate, and other dealer vehicle programs. The company has a strategic collaboration with Panasonic Corporation of North America and Qualcomm Technologies. Ford Motor Company was founded in 1903 and is based in Dearborn, Michigan.
Federal Signal Company Profile
Federal Signal Corporation, together with its subsidiaries, designs, manufactures, and supplies a suite of products and integrated solutions for municipal, governmental, industrial, and commercial customers in the United States, Canada, Europe, and internationally. It operates through two segments, Environmental Solutions Group and Safety and Security Systems Group. The Environmental Solutions Group segment offers a range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks, and water blasting equipment under the Elgin, Vactor, Guzzler, Westech, and Jetstream brand names. Is also manufactures dump truck bodies and trailers for maintenance and infrastructure end-markets under the Ox Bodies, Crysteel, J-Craft, Duraclass, Rugby, and Travis brand names. In addition, this segment engages in the sale of parts, service and repair, equipment rental, and training activities under the FS Solutions brand. The Safety and Security Systems Group segment provides systems and products for campus and community alerting, emergency vehicles, first responder interoperable communications, and industrial communications, as well as command and municipal networked security. Its products include vehicle lightbars and sirens, public warning sirens, general alarm systems, public address systems, and public safety software. This segment sells its products under the Federal Signal, Federal Signal VAMA, and Victor brand names. The company sells its products through wholesaler, distributor, independent manufacturer representative, original equipment manufacturer, and direct sales force, as well as independent foreign distributor. Federal Signal Corporation was founded in 1901 and is headquartered in Oak Brook, Illinois.