Contrasting Omega Flex (NASDAQ:OFLX) & Federal Signal (NYSE:FSS)

Federal Signal (NYSE:FSS) and Omega Flex (NASDAQ:OFLX) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, profitability, analyst recommendations, earnings and risk.

Analyst Recommendations

This is a summary of current recommendations and price targets for Federal Signal and Omega Flex, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Signal	0	2	3	1	2.83
Omega Flex	1	0	0	0	1.00

Federal Signal currently has a consensus price target of $140.50, indicating a potential upside of 18.12%. Given Federal Signal’s stronger consensus rating and higher probable upside, analysts plainly believe Federal Signal is more favorable than Omega Flex.

Profitability

This table compares Federal Signal and Omega Flex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federal Signal	11.66%	21.36%	13.07%
Omega Flex	12.27%	14.26%	11.54%

Risk and Volatility

Federal Signal has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, Omega Flex has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Dividends

Federal Signal pays an annual dividend of $0.60 per share and has a dividend yield of 0.5%. Omega Flex pays an annual dividend of $1.36 per share and has a dividend yield of 5.1%. Federal Signal pays out 12.9% of its earnings in the form of a dividend. Omega Flex pays out 114.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Signal has raised its dividend for 3 consecutive years and Omega Flex has raised its dividend for 7 consecutive years. Omega Flex is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

92.7% of Federal Signal shares are owned by institutional investors. Comparatively, 36.1% of Omega Flex shares are owned by institutional investors. 3.3% of Federal Signal shares are owned by company insiders. Comparatively, 65.2% of Omega Flex shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Federal Signal and Omega Flex”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Signal	$2.18 billion	3.33	$246.60 million	$4.64	25.64
Omega Flex	$98.30 million	2.76	$14.83 million	$1.19	22.61

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

Summary

Federal Signal beats Omega Flex on 14 of the 18 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 Omega Flex

Omega Flex, Inc., together with its subsidiaries, manufactures and sells flexible metal hoses and accessories in North America and internationally. It offers flexible gas piping for use in residential and commercial buildings; fittings; containment pining; and corrugated medical tubing for use in hospitals, ambulatory care centers, dental, physician and veterinary clinics, laboratories, and other facilities. The company sells its products under the TracPipe, CounterStrike, AutoSnap, AutoFlare, DoubleTrac, DEF-Trac, and MediTrac brand names. It serves various markets, including construction, manufacturing, transportation, petrochemical, pharmaceutical, and other industries. The company sells its products through independent sales representatives, distributors, fabricating distributors, wholesalers, original equipment manufacturers, and direct sales, as well as through its website. The company was formerly known as Tofle America, Inc. and changed its name to Omega Flex, Inc. in 1996. Omega Flex, Inc. was incorporated in 1975 and is based in Exton, Pennsylvania.