FSS
Federal Signal Corporation
$118.32
Platform & Compounding FCF
50%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 14.2% above fair value
You pay
$118.32
Bear
$64.81
Fair
$103.64
Bull
$145.89
Bear
$64.81
-45.2%
8% stage 1 growth, 11% discount
Fair
$103.64
-12.4%
14% stage 1 growth, 11% discount
Bull
$145.89
+23.3%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
35.9x
Market is pricing in (growth)
16.8%
vs 14.0% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $140.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $103.64 per share.
Warnings
Wall Street's average price target is $140.00 (from 11 analysts). Our estimate is 32% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions