Federal Signal (NYSE: FSS) and Macquarie Infrastructure (NYSE:MIC) are both multi-sector conglomerates companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, risk, earnings and institutional ownership.
Valuation & Earnings
This table compares Federal Signal and Macquarie Infrastructure’s revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
Macquarie Infrastructure has higher revenue and earnings than Federal Signal. Macquarie Infrastructure 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
87.6% of Federal Signal shares are owned by institutional investors. Comparatively, 76.5% of Macquarie Infrastructure shares are owned by institutional investors. 4.2% of Federal Signal shares are owned by insiders. Comparatively, 5.9% of Macquarie Infrastructure shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Volatility & Risk
Federal Signal has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Macquarie Infrastructure has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.
Federal Signal pays an annual dividend of $0.28 per share and has a dividend yield of 1.2%. Macquarie Infrastructure pays an annual dividend of $5.76 per share and has a dividend yield of 14.9%. Federal Signal pays out 27.5% of its earnings in the form of a dividend. Macquarie Infrastructure pays out 107.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Macquarie Infrastructure has increased its dividend for 6 consecutive years. Macquarie Infrastructure is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings for Federal Signal and Macquarie Infrastructure, as reported by MarketBeat.
||Strong Buy Ratings
Federal Signal presently has a consensus price target of $20.00, indicating a potential downside of 12.20%. Macquarie Infrastructure has a consensus price target of $71.00, indicating a potential upside of 84.18%. Given Macquarie Infrastructure’s higher probable upside, analysts plainly believe Macquarie Infrastructure is more favorable than Federal Signal.
This table compares Federal Signal and Macquarie Infrastructure’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Macquarie Infrastructure beats Federal Signal on 10 of the 17 factors compared between the two stocks.
Federal Signal Company Profile
Federal Signal Corporation designs, manufactures and supplies a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. The Company’s segments include the Environmental Solutions Group and the Safety and Security Systems Group. Its Environmental Solutions Group manufactures and supplies a range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks and waterblasting equipment. The products are sold to both municipal and industrial customers under the Elgin, Vactor, Guzzler and Jetstream brand names. Safety and Security Systems is a manufacturer and supplier of systems and products that law enforcement, fire rescue, emergency medical services, campuses military facilities and industrial sites use to protect people and property. It offers systems for campus and community alerting, emergency vehicles, first responder interoperable communications and industrial communications, among others.
Macquarie Infrastructure Company Profile
Macquarie Infrastructure Corporation owns and operates a group of businesses that provide services, such as bulk liquid terminalling and handling services. The Company operates through four segments: International-Matex Tank Terminals (IMTT), Atlantic Aviation, Contracted Power (CP) and MIC Hawaii. Its group of businesses also provides services, such as aircraft fueling, CP generation and utility gas services. Its group of businesses provides services to businesses, government agencies and individuals in the United States. IMTT segment provides bulk liquid terminal services in the United States. As of December 31, 2016, Atlantic Aviation operated Fixed based operations (FBOs) at 69 airports in the United States. The businesses in its CP segment sell electricity to off-takers, pursuant to multi-year contracts. MIC Hawaii segment consists of Hawaii Gas and several smaller businesses. Hawaii Gas consists of a gas utility and a liquefied petroleum gas (LPG) distribution business.
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