Federal Signal (NYSE:FSS – Get Free Report) and Sumitomo (OTCMKTS:SSUMY – Get Free Report) are both multi-sector conglomerates companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.
Risk & Volatility
Federal Signal has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Sumitomo has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500.
Profitability
This table compares Federal Signal and Sumitomo’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Federal Signal | 11.56% | 21.18% | 13.14% |
| Sumitomo | 8.19% | 12.21% | 4.75% |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Federal Signal | $2.18 billion | 3.15 | $246.60 million | $4.40 | 25.61 |
| Sumitomo | $48.74 billion | 1.10 | $3.99 billion | $3.31 | 13.53 |
Sumitomo has higher revenue and earnings than Federal Signal. Sumitomo is trading at a lower price-to-earnings ratio than Federal Signal, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
92.7% of Federal Signal shares are owned by institutional investors. 3.3% of Federal Signal shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Dividends
Federal Signal pays an annual dividend of $0.60 per share and has a dividend yield of 0.5%. Sumitomo pays an annual dividend of $0.67 per share and has a dividend yield of 1.5%. Federal Signal pays out 13.6% of its earnings in the form of a dividend. Sumitomo pays out 20.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Federal Signal has raised its dividend for 3 consecutive years.
Analyst Recommendations
This is a breakdown of recent ratings for Federal Signal and Sumitomo, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Federal Signal | 0 | 1 | 4 | 1 | 3.00 |
| Sumitomo | 0 | 1 | 0 | 1 | 3.00 |
Federal Signal currently has a consensus price target of $139.25, suggesting a potential upside of 23.58%. Given Federal Signal’s higher probable upside, research analysts plainly believe Federal Signal is more favorable than Sumitomo.
Summary
Federal Signal beats Sumitomo on 13 of the 16 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 Sumitomo
Sumitomo Corporation engages in general trading business worldwide. It operates through six segments: Metal Products; Transportation & Construction Systems; Infrastructure; Media & Digital; Living Related & Real Estate; and Mineral Resources, Energy, Chemical & Electronics. The company provides steel sheets and tubular products; and manufactures, leases, sells, services, and finances ships, aircrafts, motor vehicles, construction equipment, and components and parts. It is involved in the development of renewable energy projects comprising power generation and power plant engineering, procurement, and construction activities; electricity retail; industrial facilities and equipment, water, transportation systems and infrastructure, airports, smart city project, environmental solutions, and storage battery businesses; development and operation of industrial parks; arranging insurance; and provision of logistics services. In addition, the company engages in the cable television, 5G related technologies, programming distribution, movies, digital media and video content, TV shopping, and e-commerce businesses; cell phone, ICT platform, digital solution, and venture capital businesses; provision of smart communications infrastructure; operation of food supermarkets and drugstore chains; trade of cement and building materials; and real estate businesses. Further, it develops and trades in coal, iron ore, manganese, uranium, non-ferrous and precious metals, petroleum, natural gas and liquefied natural gas, and commodity derivative transactions; trades in non-ferrous metal products, liquefied petroleum gas, storage batteries, carbon products, plastics, organic and inorganic chemicals, silicon wafers, LEDs, pharmaceuticals, agricultural chemicals, household insecticides, fertilizers, and veterinary drugs; engages in the investing activities; and provides electronics manufacturing services. Sumitomo Corporation was incorporated in 1919 and is headquartered in Tokyo, Japan.
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