Motorola Solutions Stock Has More Than Doubled Market Returns Since 2018- Here’s Why

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Motorola Solutions

Motorola Solutions Inc. (NYSE: MSI) stock price gained 107% from $115 in 2018 end, to around $238 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company also witnessed a rise in revenue over this period, and revenue per share has increased, despite a marginal rise in the outstanding share count. Finally, over the same period, the S&P 500 returned around 50%, meaning that MSI stock managed to more than double the broader market return since late-2018.

In our interactive dashboard, Why Motorola Solutions Stock Moved: MSI Stock Has Gained 107% 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 as the pandemic hampered sales.
  • However, revenues picked up and rose to $8.2 billion, as of the company’s most recent FY ’21 earnings. Revenues currently stand even higher at $8.5 billion currently, on an LTM basis.
  • MSI’s revenue comes evenly from both products and services, with the services segment defining more of the company’s overall sales growth over the past few years, and currently standing at 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 13% from $44.58 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 164.7 million in 2018 to 167.6 million currently.
  • Due to this, RPS has risen from $44.58 in FY ’18 to $50.46 currently.

(C) Price-To-Sales (P/S) multiple for MSI rose from 2.6x in FY ’18 to 5.6x in FY ’21 but has pulled back to 4.7x currently, still around 1.8x higher than its FY ’18 level

  • Due to MSI’s steady performance since 2018-end, its P/S multiple rose strongly from 2.6x in FY ’18 to 5.6x in FY ’21.
  • However, amidst concerns around current economic conditions, the P/S multiple has pulled back and currently stands at around 4.7x.
  • For additional details about the company’s EBITDA and comparison to peers, see Motorola Solutions (MSI) EBITDA Comparison.

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 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MSI Return -5% -12% 188%
 S&P 500 Return -6% -23% 63%
 Trefis Multi-Strategy Portfolio -4% -26% 193%

[1] Month-to-date and year-to-date as of 11/3/2022
[2] Cumulative total returns since the end of 2016

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