Smart Money At Play: Jennifer L Sherman Acquires Federal Signal Stock Options Worth $67K

Jennifer L Sherman, President & CEO at Federal Signal FSS, reported acquisition of company stock options on May 6, according to a new SEC filing.

What Happened: Sherman, President & CEO at Federal Signal, acquired stock options for 35,896 shares of FSS. This information was disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Monday. The options allow Sherman to buy the company's stock at $82.31 per share.

As of Tuesday morning, Federal Signal shares are down by 0.0%, with a current price of $84.2. This implies that Sherman's 35,896 shares have a value of $67,843.

Delving into Federal Signal's Background

Federal Signal Corp designs and manufactures products and integrated solutions for municipal, governmental, industrial, and airport customers. It operates in the segments of Environmental Solutions Group and the Safety and Security Systems Group. The Environmental Solutions group manufactures and supplies street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks, high-performance water blasting equipment, dump truck bodies, and trailers. The Safety and Security Systems Group offers comprehensive systems and products such as campus and community alerting, emergency vehicles, first responder interoperable communications, and others. The company generates a majority of its revenue from the Environmental Solutions Group segment.

Federal Signal: A Financial Overview

Revenue Growth: Federal Signal's revenue growth over a period of 3 months has been noteworthy. As of 31 March, 2024, the company achieved a revenue growth rate of approximately 10.22%. This indicates a substantial increase in the company's top-line earnings. As compared to competitors, the company surpassed expectations with a growth rate higher than the average among peers in the Industrials sector.

Key Profitability Indicators:

• Gross Margin: The company maintains a high gross margin of 27.3%, indicating strong cost management and profitability compared to its peers.

• Earnings per Share (EPS): Federal Signal's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.85.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.28.

Valuation Overview:

• Price to Earnings (P/E) Ratio: Federal Signal's stock is currently priced at a premium level, as reflected in the higher-than-average P/E ratio of 28.54.

• Price to Sales (P/S) Ratio: The current P/S ratio of 2.94 is above industry norms, reflecting an elevated valuation for Federal Signal's stock and potential overvaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Federal Signal's EV/EBITDA ratio of 18.03 exceeds industry averages, indicating a premium valuation in the market

Market Capitalization Analysis: The company's market capitalization is below the industry average, suggesting that it is relatively smaller compared to peers. This could be due to various factors, including perceived growth potential or operational scale.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

The Impact of Insider Transactions on Investments

While insider transactions provide valuable information, they should be part of a broader analysis in making investment decisions.

In legal terms, an "insider" refers to any officer, director, or beneficial owner of more than ten percent of a company's equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Cracking Transaction Codes

Delving into transactions, investors typically prioritize those unfolding in the open market, as precisely outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Federal Signal's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.