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Investing.com -- Federal Signal Corporation (NYSE:FSS) reported second-quarter earnings that surpassed analyst estimates, prompting the company to raise its full-year outlook and sending shares up 5% in premarket.
The environmental and safety solutions provider posted adjusted earnings per share of $1.17 for the quarter ended June 30, exceeding the analyst consensus of $1.06. Revenue reached $565 million, beating the $537.3 million estimate and representing a 15% increase from the same period last year. Organic growth contributed $42 million, or 9%, to the revenue increase.
"In what is typically a seasonally-strong period, our businesses were able to deliver 15% YoY net sales growth, 20% operating income improvement, gross margin expansion, and a 100-basis point increase in adjusted EBITDA margin during a record-setting second quarter," said Jennifer L. Sherman, President and Chief Executive Officer.
The company’s Environmental Solutions Group, which accounted for most of the revenue, saw an 18% sales increase to $481 million compared to the prior-year quarter. The Safety and Security Systems Group reported a 3% revenue increase to $84 million.
Federal Signal also reported strong order intake of $540 million, up 14% from the previous year, maintaining a solid backlog of $1.08 billion.
Following the strong performance, the company raised its full-year 2025 outlook, now expecting revenue between $2.07 billion and $2.13 billion, up from its previous forecast of $2.02 billion to $2.10 billion. The new revenue guidance exceeds the analyst consensus of $2.05 billion. Federal Signal also increased its adjusted EPS outlook to $3.92-$4.10, above the consensus estimate of $3.83.
The company also raised its consolidated EBITDA margin target to a new range of 16% to 22%, from the prior range of 14% to 20%.
Operating cash flow for the quarter increased 47% to $60 million, providing flexibility for growth initiatives, acquisitions, and shareholder returns. During the quarter, the company paid $8.5 million in dividends and repurchased $20 million of its stock.
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