Federal Signal (FSS) shares plummeted 5.04% in pre-market trading on Thursday, despite the company reporting better-than-expected third-quarter results and raising its full-year guidance. The sharp decline comes as a surprise to many investors, given the positive nature of the earnings report.

The company reported third-quarter adjusted earnings per share of $1.14, surpassing the analyst estimate of $1.08. Net sales for the quarter reached $555 million, exceeding the expected $545.2 million. Federal Signal also posted a net income of $68.1 million for the period. Furthermore, the company raised its full-year outlook, now projecting adjusted EPS between $4.09 and $4.17, up from the previous range of $3.92 to $4.10. The revenue guidance was also increased to between $2.10 billion and $2.14 billion.

The stark contrast between the positive earnings report and the stock's negative performance has left many market observers puzzled. Possible explanations for the sell-off could include profit-taking by investors following the earnings announcement, concerns about the sustainability of growth despite the raised guidance, or the market having anticipated even stronger results. As trading progresses, investors will be closely watching for any additional news or analyst commentary that might shed light on the unexpected stock movement.