Motorola Solutions Q3 Earnings: Can NYSE:MSI Hit Its $1.78 EPS Target?

in EARNINGS/INVESTING IDEAS by

Motorola Solutions, Inc. (NYSE:MSI) is scheduled to report Q3 earnings results after markets close for trading on October 29, 2020.

The company is expected to report earnings of $1.78/share on revenue of $1.829 billion. The consensus earnings per share (EPS) of $1.78/share is based on a poll of 11 analysts and represents a decline in eps of −12.9% over the same quarter last year, when the company reported earnings of $2.04/share.

The revenue forecast of $1.829 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −8.3%. Last year the company reported $1.994 billion in revenue for the quarter.

Expected to report EPS contraction of −12.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,829.14 $1,994.00 −8.3%
EPS $1.78 $2.04 −12.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Motorola Solutions, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.22 $1.39 14.0% Beat
Q1, 2020 $1.30 $1.49 15.0% Beat
Q4, 2019 $2.80 $2.94 5.0% Beat
Q3, 2019 $1.96 $2.04 4.0% Beat
Q2, 2019 $1.60 $1.69 5.4% Beat
Q1, 2019 $1.15 $1.28 11.3% Beat
Q4, 2018 $2.52 $2.63 4.5% Beat
Q3, 2018 $1.72 $1.94 13.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by increasing 4.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $138.33 $144.26 4.3% Increase
May 7, 2020 $135.30 $131.27 −3.0% Decline
February 6, 2020 $176.69 $179.46 1.6% Increase
October 30, 2019 $164.75 $166.32 1.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.98, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.98 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Motorola Solutions, Inc. is currently trading at $172.30/share, down −1.4% for the day. The company is trading at approximately 91.9% of its 52-week high of $187.49/share. The company’s stock price is up 19.4% since the last earnings report and up 2.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 64.90 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:MSI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 34.74 and a forward P/E multiple of 22.77.

Motorola Solutions, Inc.’s current share price also implies a price-to-book (P/B) multiple of −35.25. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $172.30
P/E Ratio 34.7x
P/E Ratio (Fwd) 22.8x
PEG Ratio −1.9
Total Debt / Total Capital 17.1%
Levered Free Cash Flow $1.617 billion
EV / EBITDA 16.7x

Finbox

Motorola Solutions, Inc. is a large-cap stock with a market capitalization of $29.254 billion and a total enterprise value of $34.064 billion. The company operates in the Information Technology sector and the Communications Equipment industry.

Motorola Solutions, Inc. provides mission-critical communication solutions in the United States, the United Kingdom, Canada, and internationally. The company operates in two segments, Products and Systems Integration, and Services and Software. The Products and Systems Integration segment offers a portfolio of infrastructure, devices, accessories, and video solutions, as well as the implementation, optimization, and integration of networks, devices, software, and applications for government, public safety and first-responder agencies, municipalities, and commercial and industrial customers. Its products include two-way portable and vehicle-mounted radios, accessories, software features, and upgrades; video cameras; radio network core and central processing software, base stations, consoles, and repeaters; and video analytics, network video management hardware and software, and access control solutions. The Services segment provides repair, technical support, and hardware maintenance services. This segment also offers monitoring, software updates, and cybersecurity services; and public safety and enterprise command center software suite, unified communications applications, and video software solutions. It serves for government, public safety, and commercial communication networks. The company was formerly known as Motorola, Inc. and changed its name to Motorola Solutions, Inc. in January 2011. Motorola Solutions, Inc. was founded in 1928 and is headquartered in Chicago, Illinois.

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