Motorola Solutions, Inc. (MSI - Get Rating) in Schaumburg, Ill., offers communications and analytics solutions. The company provides land mobile radio communications (LMR), video security and access control and command center software, video security, and analytics, supported by managed and support services. It operates through the Products and Systems Integration and Software and Services segments.

On May 12, 2022, MSI announced the acquisition of Videotec S.p.A., a global provider of ruggedized video security solutions based in Italy. MSI’s Chairman and CEO Greg Brown said, “With Videotec’s specialized suite of cameras, we’re extending the breadth of our portfolio to help secure and support the demanding environments of these complex, essential industries.”

MSI’s shares have declined 21.4% in price year-to-date. However, the stock has gained 6.3% over the past year to close the last trading session at $213.39.

Here is what could influence MSI’s performance in the upcoming months:

Mixed Financials

MSI’s sales increased 7% year-over-year to $1.89 billion for the first quarter, ended April 2, 2022. The company’s non-GAAP net earnings attributable declined 9.2% year-over-year to $294 million. Also, its non-GAAP EPS attributable came in at $1.70, representing a 9% decline year-over-year. In addition, its non-GAAP operating earnings decreased 9% year-over-year to $374 million.

Stretched Valuation

In terms of forward non-GAAP P/E, MSI’s 21.65x is 15.1% higher than the 18.81x industry average. And its 15.72x forward EV/EBITDA is 31.4% higher than the 11.96x industry average. And the stock’s 17.64x forward EV/EBIT is 13.9% higher than the 15.48x industry average.

Favorable Analyst Estimates

Analysts expect MSI’s EPS for the quarter ending Sept. 30, 2022, to increase 17% year-over-year to $2.75. Its revenue for its fiscal year 2022 is expected to increase 7.2% year-over-year to $8.76 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters.

Higher-than-industry Profitability

In terms of trailing-12-month net income margin, MSI’s 15.30% is 162.4% higher than the 5.83% industry average. And  its 29.92% trailing-12-month EBITDA margin is 121.8% higher than the 13.49% industry average. Furthermore, the stock’s 24.62% trailing-12-month EBIT margin is significantly higher than the 8.69% industry average.

POWR Ratings Reflect Uncertainty

MSI has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MSI has a C grade for Value, which is in sync with its 3.61x forward non-GAAP PEG , which is 159.2% higher than the 1.39x industry average.

MSI is ranked #19 out of 53 stocks in the Technology – Communication/Networking industry. Click here to access MSI’s growth, Momentum, Stability, Sentiment, and Quality ratings.

Bottom Line

MSI is currently trading below its 50-day and 200-day moving averages of $225.29 and $238.17, respectively, indicating a downtrend. Furthermore, the stock looks overvalued at the current price level. Thus, we think it could be wise to wait for a better entry point in the stock.

How Does Motorola Solutions, Inc. (MSI) Stack Up Against its Peers?

While MSI has an overall POWR Rating of C, one might want to consider investing in the following Technology – Communication/Networking stocks with an A (Strong Buy) and B (Buy) rating: Telefonaktiebolaget LM Ericsson (publ) (ERIC - Get Rating), Extreme Networks, Inc. (EXTR - Get Rating), and Viavi Solutions Inc. (VIAV - Get Rating).

MSI shares were trading at $205.87 per share on Wednesday morning, down $7.52 (-3.52%). Year-to-date, MSI has declined -23.96%, versus a -15.73% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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