Assessing Valuation After an 18% Pullback Despite Ongoing Earnings Growth
Motorola Solutions (MSI) has quietly pulled back about 18% this year, even as its revenue and net income keep growing at high single digit rates, creating an interesting gap between the company’s financial performance and its share price.
See our latest analysis for Motorola Solutions.
That disconnect shows up clearly in the numbers, with a roughly 18 percent year to date share price decline and a 1 year total shareholder return of about negative 19 percent, despite a strong three year total shareholder return above 50 percent that suggests long term momentum is still very much intact.
If Motorola Solutions has you rethinking where the next leg of growth might come from, this could be a good moment to explore high growth tech and AI stocks for other compelling ideas in the space.
With shares down sharply but earnings still climbing, investors are left with a familiar puzzle: is Motorola Solutions now trading below its true worth, or is the market already baking in years of future growth?
With the most followed fair value sitting well above Motorola Solutions last close of 376.48 dollars, the narrative argues that the recent pullback has gone too far and that the numbers still point to meaningful upside.
The transition toward a greater mix of software and managed/recurring services, especially in command center and video solutions, continues to drive operating leverage and net margin expansion. This shift is further supported by strong attachment rates on new hardware (e.g., APX NEXT and SVX) and growing international SaaS/cloud deployments, boosting long term earnings growth.
Want to see what kind of revenue climb, margin lift, and future earnings multiple are needed to justify that upside case? The narrative spells out a detailed path, but the most aggressive assumptions sit beneath the surface. Curious how confidently the numbers stretch into the future, and what they imply for today’s price gap? The full story connects every one of those projections.
Result: Fair Value of $494 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, several risks could derail that upside, including slower adoption of recurring software and services, as well as heightened competition in public safety communications.
Find out about the key risks to this Motorola Solutions narrative.
While the popular narrative sees Motorola Solutions as about 23.7 percent undervalued, our price to earnings work sends a more cautious message. The shares trade at 29.6 times earnings, cheaper than the communications peer average of 34.4, but above a fair ratio of 25.6.
