Motorola Solutions trades at $399.39 and has moved in lockstep with the market. Its shares have returned 8.8% over the last six months while the S&P 500 has gained 13.2%.
Is now a good time to buy MSI? Find out in our full research report, it’s free.
Why Are We Positive On MSI?
Born from the company that invented the first portable handheld police radio in 1940, Motorola Solutions (NYSE: MSI) provides mission-critical communications, video security, and command center software solutions for public safety agencies and enterprise customers.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Motorola Solutions’s 9.5% annualized revenue growth over the last five years was impressive. Its growth surpassed the average business services company and shows its offerings resonate with customers.
2. Adjusted Operating Margin Rising, Profits Up
Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.
Looking at the trend in its profitability, Motorola Solutions’s adjusted operating margin rose by 5.3 percentage points over the last five years, as its sales growth gave it immense operating leverage. Its adjusted operating margin for the trailing 12 months was 30.4%.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Motorola Solutions has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 19.2% over the last five years.
Final Judgment
These are just a few reasons why we're bullish on Motorola Solutions, but at $399.39 per share (or 23.8× forward P/E), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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