Motorola Solutions, Inc. (NYSE: MSI)

Sector: Technology Industry: Communication Equipment CIK: 0000068505
Market Cap 63.92 Bn
P/B 27.47
P/E 30.21
P/S 5.65
ROIC (Qtr) 19.92
Div Yield % 1.45
Rev 1y % (Qtr) 7.85
Total Debt (Qtr) 9.81 Bn
Debt/Equity (Qtr) 4.21

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 2.65B provides exceptional 378.71x coverage of minority interest expenses 7M, showing strong core operations.
  • Operating cash flow of 2.65B provides exceptional 10.69x coverage of interest expenses 248M, showing strong debt service capability.
  • Robust free cash flow of 2.41B exceeds capital expenditure of 237M by 10.19x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 8.89B provides 58.50x coverage of working capital 152M, indicating strong operational backing.
  • Cash position of 894M provides exceptional 127.71x coverage of minority interest expenses 7M, indicating strong liquidity.

Bear case

  • Operating cash flow of 2.65B barely covers its investment activities of (5.08B), with a coverage ratio of -0.52, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (5.08B) provide weak support for R&D spending of 947M, which is -5.36x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 2.65B provides thin coverage of dividend payments of (710M) with a -3.73 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 894M provide limited coverage of acquisition spending of (4.86B), which is -0.18x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 2.65B provides insufficient coverage of deferred revenue obligations of 2.07B, which is 1.28x, raising concerns about future service delivery capabilities.

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.67 2.22
EV to Cash from Ops. EV/CFO 26.00 10.78
EV to Debt EV to Debt 7.03 25.00
EV to EBIT EV/EBIT 23.12 32.18
EV to EBITDA EV/EBITDA 21.36 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 28.55 -3.32
EV to Market Cap EV to Market Cap 1.08 1.17
EV to Revenue EV/Rev 6.09 27.87
Price to Book Value [P/B] P/B 27.47 5.35
Price to Earnings [P/E] P/E 30.21 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.98 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 34.40 -25.01
Dividend per Basic Share Div per Share (Qtr) 4.36 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.09 4.46
Interest Coverage Int. cover (Qtr) 12.02 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.95 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -36.32 463.06
Dividend Growth (1y) % Div 1y % (Qtr) 11.22 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 32.15 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.47 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 41.21 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 44.76 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 35.72 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 4.32 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.33 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.60 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.03
Cash Ratio Cash Ratio (Qtr) 0.16 1.20
Current Ratio Curr Ratio (Qtr) 1.03 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 4.21 0.43
Interest Cover Ratio Int Coverage (Qtr) 12.02 -12.93
Times Interest Earned Times Interest Earned (Qtr) 12.02 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 29.60 -40.66
EBIT Margin % EBIT Margin % (Qtr) 26.35 -52.32
EBT Margin % EBT Margin % (Qtr) 24.16 -59.46
Gross Margin % Gross Margin % (Qtr) 51.40 39.35
Net Profit Margin % Net Margin % (Qtr) 18.70 -60.72