Is Federal Signal Corp. overvalued or undervalued?

As of 24 April 2025, the valuation grade for Federal Signal Corp. has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently deemed overvalued. Key ratios include a P/E ratio of 32, an EV to EBITDA of 19.33, and a Price to Book Value of 5.66, all of which suggest that the stock is trading at a premium compared to its earnings and asset value.
In comparison to peers, Federal Signal's P/E ratio stands out against CNH Industrial NV, which has a P/E of 15.72, and BorgWarner, Inc., which is at 7.71, highlighting the disparity in valuation. Furthermore, the PEG ratio of 1.73 indicates that the stock may not be justified by its growth prospects relative to its price. Notably, Federal Signal has outperformed the S&P 500 over various time frames, including a 22.05% return over the past year, reinforcing the notion that its current valuation may not be sustainable.