Will Motorola Solutions Q1 Earnings Benefit From Easing Component Prices?

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Motorola Solutions

Motorola Solutions Inc. (NYSE: MSI) – one of the largest suppliers of land-mobile-radio (LMR) solutions – is expected to report its Q1 2023 results on May 4. We expect the company’s revenues for the quarter to stand at about $2.15 billion, slightly ahead of consensus estimates, marking a roughly 13% growth versus last year. We expect that earnings will come in at about $2.10 per share, ahead of the $2.05 consensus estimates. See our analysis of Motorola Solutions Earnings Preview for a closer look at what to expect when the company publishes earnings.

Despite concerns about an economic slowdown, demand for Motorola Solutions products has been strong. Over Q4 2022, the most recently reported quarter, MSI’s revenues rose 17% year-over-year to $2.7 billion, driven primarily by stronger land mobile radio (LMR) and video security and access control sales. Although Motorola is likely to see sales growth cool a bit over Q1, the company should see demand from customers upgrading from its previous generation of land mobile radios to newer models. The company has also indicated that margins should look up in 2023, as supply chain-related headwinds seen through 2022 ease with component price inflation also potentially cooling. Although we might not see the full impact of this in Q1, we could see a more meaningful improvement through the rest of this year.

So is MSI stock still a buy at current levels of around $293 per share? MSI stock currently trades at about 26x forward earnings which we believe is a relatively premium valuation, despite MSI’s strong cash flows, customer lock-in, and the general resilience of its business.  We value MSI stock at about $284 per share, which is slightly below the current market price. See our analysis Motorola Valuation: Is MSI Stock Expensive Or Cheap? for more details.

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Returns Apr 2023
MTD [1]
YTD [1]
Total [2]
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[1] Month-to-date and year-to-date as of 4/30/2023
[2] Cumulative total returns since the end of 2016

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