Federal Signal (NYSE:FSS) and Star Equity (NASDAQ:STRR) Critical Contrast

Federal Signal (NYSE:FSS) and Star Equity (NASDAQ:STRR) are both multi-sector conglomerates companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Valuation & Earnings

This table compares Federal Signal and Star Equity”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Signal	$1.86 billion	3.60	$216.30 million	$3.42	32.17
Star Equity	$53.36 million	0.12	-$10.44 million	($3.43)	-0.58

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

Institutional & Insider Ownership

92.7% of Federal Signal shares are held by institutional investors. Comparatively, 3.8% of Star Equity shares are held by institutional investors. 3.3% of Federal Signal shares are held by insiders. Comparatively, 33.5% of Star Equity shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Signal	0	2	1	0	2.33
Star Equity	0	0	1	0	3.00

Federal Signal currently has a consensus price target of $108.67, suggesting a potential downside of 1.24%. Star Equity has a consensus price target of $5.00, suggesting a potential upside of 150.00%. Given Star Equity’s stronger consensus rating and higher possible upside, analysts clearly believe Star Equity is more favorable than Federal Signal.

Volatility and Risk

Federal Signal has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500. Comparatively, Star Equity has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Federal Signal	11.10%	18.44%	12.10%
Star Equity	-16.43%	-8.24%	-3.48%

Summary

Federal Signal beats Star Equity on 10 of the 13 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 Star Equity

Star Equity Holdings, Inc. engages in the construction business in the United States and internationally. It operates through two segments: Construction, and Investments. It manufactures modular housing units, structural wall panels, permanent wood foundation systems, and other engineered wood products; supplies general contractors with building materials; holds real estate assets; and manages investments. The company was formerly known as Digirad Corporation and changed its name to Star Equity Holdings, Inc. in December 2020. Star Equity Holdings, Inc. was founded in 1985 and is headquartered in Old Greenwich, Connecticut.