Motorola Solutions, a leading supplier of land-mobile-radio solutions, has seen its stock rise 25% year-to-date, outperforming Ericsson. The company is set to report its Q2 2024 earnings in early August, with revenues expected to reach $2.6 billion, up 8% from last year. Earnings are projected at $3 per share, in line with consensus estimates. Motorola’s Q1 2024 results were better than expected, with revenue up 10% driven by demand for radio communications and security products. Operating margins have also improved, and the company raised its full-year guidance.
Despite strong gains of 130% over the past three years, MSI stock has seen fluctuations in returns. While it outperformed the S&P 500 in 2021, it underperformed in 2023. Consistently beating the market has been challenging for many stocks in recent years, including tech giants like Apple and Google. The Trefis High Quality Portfolio, on the other hand, has outperformed the S&P 500 each year. With the current uncertain economic environment, it remains to be seen whether MSI will continue to outperform or face challenges.
There are reasons to consider investing in MSI stock, including its core LMR product’s stability and consistent cash generation. Governments tend to maintain public safety budgets, providing revenue visibility for Motorola. The company has also been making strategic acquisitions in the public security space, expanding into areas like video security and command center software. Despite these positives, MSI stock trades at a relatively high multiple of 30x forward earnings, leading some to believe it may be overvalued.
Motorola’s dividend has been growing steadily over the last five years, reaching over $3.90 per share. The company’s revenue visibility has improved, with a record backlog of $14.4 billion at the end of Q1. MSI’s investments in strategic acquisitions and expansion into new areas have positioned it well for future growth. However, some analysts believe the stock may be overpriced at its current levels, with a valuation of about $340 per share, 13% below its current market price.
The future performance of MSI stock will depend on various factors, including the company’s ability to continue growing its revenue and earnings. With strong demand for its products and services, Motorola is poised for further growth in the coming quarters. Investors will be closely watching the company’s Q2 earnings report for insights into its performance and outlook.
