Motorola Solutions Stock Has Almost Doubled The S&P’s Returns Since 2018- Here’s Why

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MSI: Motorola Solutions logo
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Motorola Solutions

Motorola Solutions Inc. (NYSE: MSI) stock price gained 113% from $115 at 2018 end, to around $245 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. Additionally, over the same period, the S&P 500 returned around 58%, meaning that MSI stock managed to strongly outperform the broader markets since late-2018.

In our interactive dashboard, Why Motorola Solutions Stock Moved: MSI Stock Has Gained 113% Since 2018, we break down the factors behind this move.

(A) MSI’s Total Revenue has grown 15% from $7.3 billion in FY 2018 to $8.5 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 rose to $8.2 billion, as of the company’s most recent FY ’21 earnings. Further, revenues stand at $8.5 billion currently, on an LTM basis.
  • 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 12% from $45.09 in 2018 to $50.46 currently

  • MSI revenue rose from $7.3 billion in 2018 to $8.5 billion currently, while the outstanding share count increased from 162.9 million in 2018 to 167.6 million currently.
  • Due to this, RPS has risen from $45.09 in FY ’18 to $50.46 currently.

(C) Price-To-Sales (P/S) multiple for MSI rose from 2.6x in FY ’18 to 5.5x 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 5.5x 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 Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MSI Return 0% -10% 194%
 S&P 500 Return -1% -18% 75%
 Trefis Multi-Strategy Portfolio -2% -17% 229%

[1] Month-to-date and year-to-date as of 9/2/2022
[2] Cumulative total returns since the end of 2016

 

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