Federal Signal shares tumble on disappointing 1Q results

Federal Signal shares fell $1.28, or 9 percent, to close at $12.93. They dropped as low as $12.30 earlier in the day. Over the past 52 weeks, the shares have traded between $9.10 and $17.

Oakbrook, Ill.-based Federal Signal said the loss was mainly a result of an impairment charge and a loss in its now-divested industrial tool business.

Its profit from continuing operations was 9 cents per share, a penny shy of analyst predictions according to a Thomson Financial poll. Revenue totaled $228.1 million, but fell short of average estimates of $306.7 million.

KeyBanc's Steve Barger backed his "Buy" rating for Federal Signal, calling the company a "evolving story," predicting that it will likely name a chief executive and announce the sale of its money-losing E-One division before its second-quarter earnings are reported in late July.

Barger said he also expects Federal Signal to see increasing benefit from its recent, higher-growth acquisitions.

"Therefore, while this quarter (and likely next) is confusing and appears to be of low quality, we believe current performance under- represents likely future results and that investors should not attempt to annualize or extrapolate on this quarter relative to future equity value," Barger wrote in a note to investors.