Motorola Solutions (MSI) AI Stock Analysis

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Motorola Solutions

(NYSE:MSI)

73Outperform

Motorola Solutions' strong financial performance and positive earnings call sentiment highlight its robust revenue and cash flow growth, along with a positive outlook for 2025. However, technical indicators suggest potential near-term weakness, and the stock appears overvalued with a high P/E ratio and low dividend yield. Overall, the company is well-positioned for growth, but potential investors should be mindful of valuation and technical trends.

Positive Factors

Growth and Strategy

Expectation for 6%+ revenue CAGR and margin expansion to help support double-digit bottom-line growth prospects.

Investment and Acquisitions

Motorola announced investments in Brinc and SkySafe to integrate drone-as-a-first-responder and drone detection technology into its CommandCentral solution.

Public Safety Demand

Record demand for public safety communications, video security, and command center software should drive long-term EPS growth in the low double digits.

Negative Factors

Stock Performance

Motorola shares traded down 10%-plus following earnings, with the decline in product backlog a contributing factor.

Tariff Impact

Management did not incorporate the looming US tariffs into guidance, which could lead to additional earnings pressure.

Valuation Concerns

The primary risk to Motorola shares is valuation multiple compression from decelerating revenue growth.

Motorola Solutions (MSI) vs. S&P 500 (SPY)

Market Cap

$70.28B

Dividend Yield0.98%

Average Volume (3M)948.39K

Price to Earnings (P/E)45.6

Beta (1Y)0.86

Revenue Growth8.41%

EPS Growth-7.83%

CountryUS

Employees21,000

SectorTechnology

Sector Strength45

IndustryCommunication Equipment

Share Statistics

EPS (TTM)9.22

Shares Outstanding166,963,550

10 Day Avg. Volume1,137,408

30 Day Avg. Volume948,391

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)6.52

Price to Cash Flow (P/CF)16.50

P/FCF Ratio15.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$511.14

Price Target Upside21.43% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering9

Motorola Solutions Business Overview & Revenue Model

Company DescriptionMotorola Solutions, Inc. (MSI) is a leading global provider of mission-critical communication solutions and services for enterprise and government customers. The company operates primarily in two segments: Products and Systems Integration, and Software and Services. Its core products include two-way radio systems, public safety communications, and video security and analytics solutions. Motorola Solutions' offerings are designed to enhance the safety, efficiency, and effectiveness of its clients' operations, with a strong focus on innovation and reliability.

How the Company Makes MoneyMotorola Solutions generates revenue through multiple streams, with the primary being the sale of its communications products and systems integration services. The company earns substantial income from its two-way radio systems and public safety communications equipment, catering to both government and enterprise customers. Additionally, Motorola Solutions has a growing Software and Services segment that provides recurring revenue through software as a service (SaaS), managed services, and support and maintenance contracts. Significant partnerships with government bodies and large enterprises, as well as acquisitions in the video security and analytics space, further bolster the company's earnings.

Motorola Solutions Financial Statement Overview

Summary

Motorola Solutions demonstrates robust financial health with strong revenue and cash flow growth. The company maintains strong profitability margins, albeit with a slight dip in net profit margin. The balance sheet reflects high leverage, though improving, with a strong return on equity. Overall, the company is in a solid position with strong cash flows supporting its operations and growth.

Income Statement

Very Positive

Motorola Solutions exhibits strong revenue growth with a Revenue Growth Rate of 8.41% from 2023 to TTM (Trailing-Twelve-Months). The Gross Profit Margin remains robust at approximately 50.27% in TTM. However, the Net Profit Margin has slightly decreased to 14.57% in TTM, indicating some pressure on profitability. EBIT and EBITDA margins remain healthy, reflecting operational efficiency.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio has improved to 3.58 in TTM, indicating better leverage management, though still high. The Return on Equity (ROE) is strong at 92.63% in TTM, driven by high net income relative to equity. The Equity Ratio is relatively low at 11.67%, suggesting reliance on debt financing.

Cash Flow

Very Positive

Motorola Solutions shows a solid Free Cash Flow Growth Rate of 19.06% from 2023 to TTM, indicating strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio is 1.52, highlighting effective conversion of earnings into cash. The Free Cash Flow to Net Income Ratio of 1.35 further supports the company's strong cash flow position.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
10.82B	9.98B	9.11B	8.17B	7.41B
	Gross Profit
5.51B	4.97B	4.23B	4.04B	3.61B
	EBIT
2.69B	2.29B	1.66B	1.67B	1.38B
	EBITDA
2.60B	2.75B	2.26B	2.26B	1.86B
	Net Income Common Stockholders
1.58B	1.71B	1.36B	1.25B	949.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.10B	1.71B	1.32B	1.87B	1.25B
	Total Assets
14.60B	13.34B	12.81B	12.19B	10.88B
	Total Debt
6.10B	6.55B	6.55B	6.01B	5.58B
	Net Debt
4.00B	4.84B	5.23B	4.13B	4.32B
	Total Liabilities
12.88B	12.60B	12.68B	12.21B	11.42B
	Stockholders Equity
1.70B	724.00M	116.00M	-40.00M	-558.00M
Cash Flow		Free Cash Flow
2.13B	1.79B	1.57B	1.59B	1.40B
	Operating Cash Flow
2.39B	2.04B	1.82B	1.84B	1.61B
	Investing Cash Flow
-507.00M	-414.00M	-1.39B	-742.00M	-437.00M
	Financing Cash Flow
-1.45B	-1.29B	-906.00M	-429.00M	-966.00M

Motorola Solutions Technical Analysis

Technical Analysis Sentiment

Negative

Last Price420.95

Price Trends

50DMA

428.37

Negative

100DMA

450.07

Negative

200DMA

442.76

Negative

Market Momentum

MACD

-2.93

Negative

RSI

43.08

Neutral

STOCH

63.36

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSI, the sentiment is Negative. The current price of 420.95 is below the 20-day moving average (MA) of 423.33, below the 50-day MA of 428.37, and below the 200-day MA of 442.76, indicating a bearish trend. The MACD of -2.93 indicates Negative momentum. The RSI at 43.08 is Neutral, neither overbought nor oversold. The STOCH value of 63.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MSI.

Motorola Solutions Risk Analysis

Motorola Solutions disclosed 28 risk factors in its most recent earnings report. Motorola Solutions reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Motorola Solutions Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOK	75 Outperform	$27.63B	20.73	8.27%	1.97%	-12.68%	90.73%
MSI	73 Outperform	$70.28B	45.59	129.87%	0.98%	8.41%	-7.83%
ERIC	68 Neutral	$24.13B	12,150.00	1.67%	2.21%	-2.08%	―
HPE	68 Neutral	$18.57B	7.00	12.09%	3.43%	10.93%	43.19%
ZBRA	67 Neutral	$11.60B	22.28	15.95%	―	8.07%	78.02%
JNPR	62 Neutral	$11.44B	39.90	6.21%	2.56%	-8.82%	-10.01%
Sector *	58 Neutral	$10.03B	10.00	-6.85%	3.09%	7.49%	-11.58%

* Technology Sector Average

Performance Comparison

MSI

Motorola Solutions

412.35

70.49

20.62%

JNPR

Juniper Networks

34.04

-1.21

-3.43%

ERIC

Telefonaktiebolaget LM Ericsson

8.15

3.01

58.56%

NOK

Nokia

5.07

1.44

39.67%

ZBRA

Zebra Tech

222.05

-49.58

-18.25%

HPE

Hewlett Packard Enterprise

14.82

-1.55

-9.47%

Motorola Solutions Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -9.44% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong overall performance in 2024 with record-breaking revenue, growth, and cash flow. The company has a positive outlook for 2025, driven by strong demand and a robust backlog. However, challenges include international revenue declines, higher operating expenses, and currency headwinds. The sentiment is positive, given the significant achievements outweighing the challenges.

Highlights

Record Revenue and Growth

Achieved record revenue in both segments and all three technologies, with double-digit growth in video and command center.

Strong Full-Year Performance

Full-year revenue was $10.8 billion, up 8%. Expanded operating margins by 380 basis points and grew EPS by 16%.

Record Backlog

Ended the year with a record backlog of $14.7 billion, up $438 million despite unfavorable currency rates.

Successful Acquisitions

Completed four acquisitions in video and command center technologies, strengthening safety and security offerings.

Strong Cash Flow Growth

Record operating cash flow of $2.4 billion, up 17% year-over-year, marking the second consecutive year of double-digit growth.

Positive Outlook for 2025

Expecting 5.5% revenue growth and strong demand in video and command center technologies for 2025.

Lowlights

Decline in International Revenue

Full-year international revenue was down 2%, primarily driven by lower Ukraine revenue and exit from ESN.

Higher Operating Expenses

Full-year OpEx was $2.4 billion, up $197 million due to higher employee incentives and legal costs.

Impact of Unfavorable Currency Rates

Reported $226 million in foreign currency headwinds affecting backlog and $120 million expected FX headwinds for 2025.

Potential Tariff Challenges

Navigating potential tariff impacts with a flexible manufacturing footprint, though current tariffs are manageable.

Company Guidance

During the fourth quarter earnings call for fiscal year 2024, Motorola Solutions reported significant achievements, including record revenue across both segments and all three technologies, with double-digit growth in video and command center technologies. The company ended the year with a record backlog of $14.7 billion, despite $226 million in unfavorable currency rates. Full-year revenue increased by 8% to $10.8 billion, driven by strong growth in both product and software & services segments. Product and SI revenue grew by 10%, while software and services revenue rose by 5% or 13% excluding the UK Home Office. Non-GAAP operating earnings for the year were $3.1 billion, with a 29% margin, and non-GAAP earnings per share increased by 16% to $13.84. For 2025, the company anticipates a 5.5% revenue growth, an increase in non-GAAP EPS to between $14.64 and $14.74, and a third consecutive year of double-digit operating cash flow growth, projected at $2.7 billion.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.