Reviewing Federal Signal (NYSE:FSS) and L.B. Foster (NASDAQ:FSTR)

L.B. Foster (NASDAQ:FSTR) and Federal Signal (NYSE:FSS) are both industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Volatility & Risk

L.B. Foster has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Federal Signal has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Dividends

L.B. Foster pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Federal Signal pays an annual dividend of $0.60 per share and has a dividend yield of 0.5%. L.B. Foster pays out 15.2% of its earnings in the form of a dividend. Federal Signal pays out 12.9% 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. Federal Signal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for L.B. Foster and Federal Signal, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
L.B. Foster	0	3	1	0	2.25
Federal Signal	0	2	3	1	2.83

L.B. Foster presently has a consensus price target of $32.00, indicating a potential downside of 6.71%. Federal Signal has a consensus price target of $140.50, indicating a potential upside of 24.08%. Given Federal Signal’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Signal is more favorable than L.B. Foster.

Earnings and Valuation

This table compares L.B. Foster and Federal Signal”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
L.B. Foster	$558.35 million	0.65	$7.55 million	$1.05	32.67
Federal Signal	$2.18 billion	3.17	$246.60 million	$4.64	24.40

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

Profitability

This table compares L.B. Foster and Federal Signal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
L.B. Foster	2.04%	7.61%	4.03%
Federal Signal	11.66%	21.36%	13.07%

Insider & Institutional Ownership

80.6% of L.B. Foster shares are owned by institutional investors. Comparatively, 92.7% of Federal Signal shares are owned by institutional investors. 7.6% of L.B. Foster shares are owned by company insiders. Comparatively, 3.3% 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 stock is poised for long-term growth.

Summary

Federal Signal beats L.B. Foster on 16 of the 18 factors compared between the two stocks.

About L.B. Foster

L.B. Foster Company provides engineered and manufactured products and services for the building and infrastructure projects in the United States, Canada, the United Kingdom, and internationally. It operates through two segments: Rail, Technologies, and Services; and Infrastructure Solutions. The Rail, Technologies, and Services segment offers new rail to passenger and short line freight railroads, industrial companies, and rail contractors, as well as used rails; rail accessories, such as rack spikes, bolts, angle bars, tie plates, and other products; insulated rail joints and related accessories; fixation fasteners, coverboards, and special accessories; and trackwork products. This segment also provides engineered concrete railroad ties, friction management products and application systems, railroad condition monitoring systems and equipment including wheel impact load detection systems, wayside data collection and management systems, and rockfall, flood, earthworks, and bridge strike monitoring; and aftermarket services. The Infrastructure Solutions segment manufactures precast concrete products for use as restrooms, concession stands, and protective storage buildings under the CXT brand for national, state, and municipal parks; and manufactures sounds walls, bridge beams, box culverts, septic tanks, and other custom pre-stressed and precast concrete products. This segment also provides steel bridge products; corrosion protection solutions; concrete-reinforced steel grid decking, open steel grid deck, aluminum bridge railing, and stay-in-place steel bridge forms; cuts, threads, and paints pipe; threading services for water well applications; protective pipeline coating services; and turnkey solutions for metering and injection systems for oil and gas markets. L.B. Foster Company was founded in 1902 and is headquartered in Pittsburgh, Pennsylvania.

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.