Comparing Mercedes-Benz Group (OTCMKTS:MBGYY) and Federal Signal (NYSE:FSS)

Mercedes-Benz Group (OTCMKTS:MBGYY) and Federal Signal (NYSE:FSS) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Profitability

This table compares Mercedes-Benz Group and Federal Signal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercedes-Benz Group	7.36%	11.66%	4.11%
Federal Signal	11.57%	18.46%	11.84%

Risk & Volatility

Mercedes-Benz Group has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, Federal Signal has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Institutional and Insider Ownership

92.7% of Federal Signal shares are held by institutional investors. 3.1% of Federal Signal shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Mercedes-Benz Group and Federal Signal”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercedes-Benz Group	$165.81 billion	N/A	$15.43 billion	C$2.88	5.15
Federal Signal	$1.72 billion	3.42	$157.40 million	$3.45	27.97

Mercedes-Benz Group has higher revenue and earnings than Federal Signal. Mercedes-Benz Group is trading at a lower price-to-earnings ratio than Federal Signal, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Mercedes-Benz Group and Federal Signal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercedes-Benz Group	1	2	0	0	1.67
Federal Signal	0	1	1	0	2.50

Federal Signal has a consensus target price of $90.00, suggesting a potential downside of 6.72%. Given Federal Signal’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Signal is more favorable than Mercedes-Benz Group.

Summary

Federal Signal beats Mercedes-Benz Group on 10 of the 13 factors compared between the two stocks.

About Mercedes-Benz Group

Mercedes-Benz Group AG operates as an automotive company in Germany and internationally. It operates through Mercedes-Benz Cars, Mercedes-Benz Vans, and Mercedes-Benz Mobility segments. The company develops, manufactures, and sells cars and vans under the Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach, G-Class brands, as well as related spare parts and accessories. It also provides financing, leasing, car subscription and rental, fleet management, insurance brokerage, and mobility services, as well as digital services for charging and payment. The company was formerly known as Daimler AG and changed its name to Mercedes-Benz Group AG in February 2022. Mercedes-Benz Group AG was founded in 1886 and is headquartered in Stuttgart, Germany.

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.