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Motorola Solutions is slated to release its Q4 and full-year 2019 results on February 6, 2020. For FY 2019, Trefis estimates that the company will report:Revenues would increase by 7.4% to $7.88 billion driven by strong growth across the products and services segments. However, our estimate is slightly lower than the consensus estimate of $7.9 billion.EPS figure would increase to $7.70 driven by higher sales and gross margin, and lower shares outstanding. However, the net income margin is likely to contract by 60 basis points, reflecting higher total expenses. Additionally, our EPS estimate is lower than the consensus EPS estimate of $7.81.
Since the expected results are roughly similar to the consensus estimates. it is unlikely to have any material impact on Motorola's stock price once earnings are announced. In fact, our forecast indicates that Motorola's valuation is $171 a share, which is similar to the current market price of $168.
(1) Revenues expected to be marginally below consensus estimates
Trefis estimates Motorola's 2019 revenues to be $7.88 billion, marginally below the consensus estimate of $7.9 billion
(1) Net sales from products $4.7 Bil (60%)
(2) Net sales from services $3.2 Bil (40%)
TOTAL $7.88 Bil (*)
Consensus $7.89 Bil
Surprise -($0.01) Bil
(*) Difference due to rounding
(2) EPS likely to miss consensus estimates
Motorola's 2019 earnings per share (EPS) expected to be $7.70 per Trefis analysis, 1.4% lower than the consensus estimate of $7.81 per share
EPS - 2019E
Total Revenues $7.9 Bil
- Total Expenses $6.6 Bil(*)
Net Income $1.3 Bil (**)
÷ Shares Outstanding 165 Mil
(*) - The expense figure includes preferred dividend and other minority expenses
(**) - Numbers don't add up due to rounding
(3) Stock price estimate ~similar to the current market price
Trefis forecast for Motorola's 2019 earnings are slightly behind the market expectations, however P/E multiple is ahead of the market estimate, working out to a fair value of $171 for Motorola's stock which is slightly ahead of the current market price of around $168.
MSI Share price [ A x B ]
2019(E)- EPS [A]
Trailing P/E Multiple [ B ]
Why Has Motorola Solutions Stock More Than Doubled Over the Last 3 Years? Motorola Solutions: Expensive Or Cheap?Motorola Solutions Revenue: How Motorola Solutions Makes Money?
Detail about our forecast for Motorola Solution's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
Trefis estimates Motorola’s 2019 revenues to be $7.88 billion, slightly below the consensus estimate of $7.89 billion.Motorola has achieved steady growth since 2016, adding well over $1.3 billion in total revenue since 2016 at an average annual rate of 10.3% driven by growth across all operating segments.We expect this trend to have continued in 2019 as strong performance in product division led by higher land mobile radio (LMR) sales, as well as incremental revenues from the latest acquisitions would have enabled the company to add well over $545 million to total revenues.Moreover, Motorola's services and software revenues have been expanding driven by the company's end-to-end offerings such as command center, its growing installed base of systems, and increasing focus on offerings such as command center.Services division is likely to have added $300 million to total revenues in 2019, with the software business accounting for a bulk of the growth.For FY 2020, we expect Motorola to witness a growth of 6% led by steady growth across all the operating divisions.
Our interactive dashboard analysis, ‘How Does Motorola Solution Make Money?', provides an in-depth view of the company's revenues along with our forecasts and a comparison of trends with peers Harris and Airbus.
What about Revenues in 2020?
See Motorola Solutions Revenue - How Does Motorola Make Money?
We provide an interactive, in-depth view of the company's revenues along with our forecasts and a comparison of trends with peers Aribus and Harris.
What about Expenses and Earnings in 2020?
For 2020, we believe that a similar growth in revenues and expenses will result in the adjusted net income margin figure remaining constant at 8.5%
(3) A trailing P/E multiple of 22.2x looks appropriate for Motorola's stock, which is higher than the current implied P/E multiple of 21.6x
We use our full cash flow model for Motorola to arrive at a P/E multiple of 22.2x for a price estimate of $171
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
MSI P/E Multiple
Harris P/E Multiple
Airbus P/E Multiple
1. How to save your forecasts for Motorola Solutions:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
With your forecast saved and named, you can compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.