Motorola Solutions Inc. (NYSE: MSI) – one of the largest suppliers of land-mobile-radio solutions – stock is up almost 50% since the beginning of 2024 (Jan. 10), compared to a 22% return of the S&P 500 over the same period. MSI’s peer Juniper Networks stock is up 34% during the same period. Also, see Will WBA Stock Maintain Its Upward Momentum?
So what’s happening with MSI stock?
Motorola Solutions delivered a strong performance in 2024, reporting revenue and earnings per share that surpassed consensus estimates in all three quarters so far. In the first nine months of 2024, the company’s revenue grew 9% year-over-year to $7.8 billion, driven by robust growth in products and system integrations, which rose 13% fueled by Land Mobile Radio Communications. Software and services revenue also saw a 3% y-o-y increase during this period. Furthermore, operating margins expanded by 20% in the three quarters of 2024. However, a $585 million loss from extinguishing the $1.0 billion Silver Lake Convertible Debt led to a 12% decline in net income to $966 million (or 5.66 per share) for the first nine months of 2024. Also, MSI’s operating cash flow jumped $522 million to $1.3 billion in the first nine months of 2024, from $799 million in the same period of 2023. That said, Motorola Solutions’ financial stability is underpinned by its robust cash flows, high customer retention rates, and the inherent resilience of its business model. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
We forecast MSI revenues to be $10.8 billion for the fiscal year 2024, up 8% y-o-y. Given the changes to our revenues and earnings forecast, we have revised our Motorola Solutions Valuation to $503 per share, based on $13.68 expected EPS and a 36.8x P/E multiple for the fiscal year 2024 – almost 10% higher than the current market price.
MSI stock’s overall performance over the last 4-year period has been far from consistent, with annual returns being more volatile than the S&P 500. Returns for the stock were 62% in 2021, -4% in 2022, 23% in 2023, and 49% in 2024. The Trefis High Quality Portfolio, with a collection of 30 stocks, is much less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
Motorola Solutions leverages expertise in Land Mobile Radio, Video Security, Access Control, and Command Center software. The company fuels innovation through strategic R&D investments, serving a diverse customer base across government and commercial sectors. MSI has increased its full-year revenue growth forecast to 8.25%, a slight uptick from its previous 8% projection. Additionally, the company expects non-GAAP earnings per share to rise, with a revised range of $13.63 to $13.68. This upward revision reflects Motorola Solutions’ growing confidence in its operational capabilities and strategic direction.
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