Analyzing Federal Signal (NYSE:FSS) and GEA Group (OTCMKTS:GEAGF)

GEA Group (OTCMKTS:GEAGF) and Federal Signal (NYSE:FSS) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of recent recommendations for GEA Group and Federal Signal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GEA Group	0	1	0	1	3.00
Federal Signal	0	2	3	1	2.83

Federal Signal has a consensus price target of $140.50, suggesting a potential upside of 24.14%. Given Federal Signal’s higher probable upside, analysts clearly believe Federal Signal is more favorable than GEA Group.

Earnings and Valuation

This table compares GEA Group and Federal Signal”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GEA Group	$6.22 billion	1.85	$468.41 million	$2.42	29.12
Federal Signal	$2.18 billion	3.17	$246.60 million	$4.64	24.39

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
GEA Group	7.70%	18.30%	7.57%
Federal Signal	11.66%	21.36%	13.07%

Volatility and Risk

GEA Group has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, Federal Signal has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Institutional & Insider Ownership

92.7% of Federal Signal shares are held by institutional investors. 3.3% of Federal Signal shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Federal Signal beats GEA Group on 10 of the 14 factors compared between the two stocks.

About GEA Group

GEA Group Aktiengesellschaft engages in the development and production of systems and components to the food, beverage, and pharmaceutical industries. It operates through Separation & Flow Technologies, Liquid & Power Technologies, Food & Health Technologies, Farm Technologies, and Heating & Refrigeration Technologies segments. The Separation & Flow Technologies segment manufacture process-related components and machinery including notably separators, decanters, homogenizers, valves, and pumps. The Liquid & Power Technologies segment offers brewing systems, liquid processing and filling, concentration, precision fermentation, crystallization, purification, drying, powder handling, and packaging, as well as systems for emission control for dairy, beverage, food, chemical, and other industries. The Food & Health Technologies segment engages in the preparation, marination, and processing of meat, poultry, seafood, and vegan products, pasta and confectionery products, baking, slicing, packaging, and frozen food processing for food processing industry; and provides tablet presses for pharmaceutical industry. The Farm Technologies segment offers customer solution for milk production and livestock farming, which includes automatic milking and feeding system, conventional milking solutions, manure handling, and digital herd management tool. The Heating & Refrigeration Technologies segment provides energy solution in the field of industrial refrigeration and heating for an array of industries including food, beverage, dairy, and oil and gas. The company was formerly known as mg technologies ag and changed its name to GEA Group Aktiengesellschaft in 2005. GEA Group Aktiengesellschaft was founded in 1881 and is headquartered in Düsseldorf, Germany.

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.