Heavy Transportation Equipment Stocks Q2 Results: Benchmarking Federal Signal (NYSE:FSS)
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Let’s dig into the relative performance of Federal Signal (NYSE:FSS) and its peers as we unravel the now-completed Q2 heavy transportation equipment earnings season.
Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.
The 14 heavy transportation equipment stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Heavy transportation equipment stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Federal Signal (NYSE:FSS)
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE:FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Federal Signal reported revenues of $490.4 million, up 10.8% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ operating margin estimates but a miss of analysts’ backlog sales estimates.
"Our businesses were able to deliver double-digit year-over-year organic net sales and earnings growth, gross margin expansion, and a 280-basis point improvement in adjusted EBITDA margin during the second quarter," commented Jennifer L. Sherman, President and Chief Executive Officer.
Unsurprisingly, the stock is down 5.8% since reporting and currently trades at $88.94.