What’s Behind Motorola Solutions Stock’s 2x Move Since Late 2018?

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MSI: Motorola Solutions logo
MSI
Motorola Solutions

Motorola Solutions Inc. (NYSE: MSI) stock price gained 102% from $115 in 2018 end, to around $232 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company witnessed a rise in revenue over this period, and revenue per share has increased, despite a rise in the outstanding share count.

In our interactive dashboard, Why Motorola Solutions Stock Moved: MSI Stock Has Gained 102% Since 2018, we break down the factors behind this move.

(A) MSI’s Total Revenue has grown 11% from $7.3 billion in 2018 to $8.2 billion on an LTM basis

  • MSI’s total revenue first rose from $7.3 billion in FY ’18 to $7.9 billion in FY ’19, before dropping to $7.4 billion in FY ’20 due to the pandemic.
  • However, revenues have since recovered and currently stand at $8.2 billion, as of the company’s most recent FY ’21 earnings.
  • MSI derives its revenues almost evenly from both products and services, with the services segment defining more of the company’s overall growth during the past few years, and now making up 44% of the company’s total sales.
  • For details about MSI revenues and comparison to peers, see Motorola Solutions (MSI) Revenue Comparison
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(B) Revenue per share (RPS) increased 7.6% from $45.09 in 2018 to $48.50 currently

  • MSI revenue rose from $7.3 billion in 2018 to $8.2 billion currently, while the outstanding share count increased from 162.9 million in 2018 to 168.5 million currently.
  • Due to this, RPS has risen from $45.09 in FY ’18 to $48.50 currently.

(C) Price-To-Sales (P/S) multiple for MSI rose from 2.6x in FY ’18 to 5.6x in FY ’21 but has pulled back to 4.8x currently, still more than 1.8x higher than its FY ’18 level

  • Due to MSI’s consistent performance since 2018-end, its P/S multiple rose steadily from 2.6x in FY ’18 to 5.6x in FY ’21.
  • However, amidst current geopolitical tensions dragging down the broader markets, the P/S multiple has pulled back and currently stands at around 4.8x.
  • For additional details about the company’s EBITDA and comparison to peers, see Motorola Solutions (MSI) EBITDA Comparison.

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Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MSI Return 6% -14% 182%
 S&P 500 Return 2% -7% 99%
 Trefis MS Portfolio Return 2% -9% 259%

[1] Month-to-date and year-to-date as of 3/21/2022
[2] Cumulative total returns since the end of 2016

 

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