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Motorola has added $1.85 billion in total revenue since 2016 at an average annual rate of 9.3% driven by growth across all operating segments.Going forward, we expect Motorola to add $325 million to total revenues in 2020 likely to be driven by about $166 million from products and $159 million from services business.Product segment has been the largest growth driver, adding well over $1 billion over 2016-2019. This growth can be primarily attributed to system deployments in the Americas as well as the incremental revenues resulting from the acquisition made over this period.We expect this division to grow by 3.5% in 2020 likely to be driven by higher land mobile radio (LMR) sales in North America and the EMEA region, well as strong growth in the video security business.Motorola’s services business has been expanding with the division adding well over $750 million in total revenues over 2016-2019 driven by the company's end-to-end offerings such as command center, its growing installed base of systems, and increasing focus on selling other offerings. Services division is expected to add $159 million to total revenues over 2019-2020, with the software business accounting for a bulk of the growth.
Details about how revenues for each of Motorola Solution's divisions have trended over the years are available in our interactive dashboard How Motorola Solutions Makes Money?
#2. Net Income increased from $560 million in 2016 to $868 million in 2019
A sharp decline in 2017 was driven by one-time tax charges due to the TCJ Act. We expect net income to rise to $990 million in 2020
Net income [AxB]
Net sales [A]
Net Income margin [B]
#2.2 EPS has fluctuated over the years from -$0.95 in 2017 to $5.62 in 2018
The EPS fell sharply in 2017 to -$0.95 due to the impact the TCJ Act as highlighted above. We expect the EPS figure to increase to $5.69 in 2020
EPS [A / B]
Net Income [A]
Shares Outstanding [B]
EPS has fluctuated over the years from -$0.95 in 2017 to $5.62 in 2018. The EPS figure fell sharply in 2017 to -$0.95 due to one-time charges incurred due to the enactment of the TCJ Act as highlighted above. We expect the EPS figure to increase to $5.69 in 2020 likely to driven by balanced growth across multiple platforms.
Shares outstanding have been range-bound between 173 million to 176 million over 2016-2019, apart from 2017 when this figure was 163 million, having a negligible impact on EPS, and we expect this trend to persist.
#3. Price-To-Earnings (P/E) multiple for Motorola has been volatile over the years but is higher than what it was in 2016
The current P/E is also higher than that for its peers Harris and Airbus.
MSI P/E Multiple
Harris P/E Multiple
Airbus P/E Multiple
Motorola’s P/E multiple expanded from 24.4x in February 2017 to 32.6x in February 2020.This compares with Harris which saw its P/E multiple drop from 38.9x to 24.8x, while Airbus’s P/E multiple has expanded from 16.3x to 21x over this period.Moreover, Motorola’s 2019 P/E multiple has been higher than both Airbus and Harris.P/E multiple expansion has been mainly driven by a continuous rise in revenues, margin expansion, as well as strong prospects from the company’s latest acquisitions.
Our Complete Set Of Analyses On Motorola Solutions