Motorola Solutions Inc Valuation – February 2019 $MSI

Company Profile (excerpt from Reuters): Motorola Solutions, Inc., incorporated on March 9, 1973, is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. It serves global customer base spanning federal, state, county, province, territory, municipal and departmental independent bodies, along with its commercial and industrial customers. The Company, through VaaS International Holdings, Inc. (VaaS), provides data and image analytics for vehicle location. The Company’s image capture and analysis platform, which includes fixed and mobile license plate reader cameras driven by machine learning and artificial intelligence, provides vehicle location data to public safety and commercial customers. VaaS platform enables controllable, audited data-sharing across multiple law enforcement agencies. Vehicle location information can help accelerate time to resolution and improve outcomes for public safety agencies, particularly when combined with police records.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,938,661,879 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.38 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 48.30% Pass
6. Moderate PEmg Ratio PEmg < 20 31.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -19.00 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.46
MG Growth Estimate 2.37%
MG Value $58.99
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $64.65
MG Value based on 0% Growth $37.90
Market Implied Growth Rate 11.45%
Current Price $139.98
% of Intrinsic Value 237.29%

Motorola Solutions Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.85 in 2015 to an estimated $4.46 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.45% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Motorola Solutions Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $2.13 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 31.4, which was below the industry average of 51.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.03.

Motorola Solutions Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.03
Graham Number $0.00
PEmg 31.40
Current Ratio 1.38
PB Ratio -19.00
Current Dividend $2.13
Dividend Yield 1.52%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,272,000,000
Total Current Liabilities $3,096,000,000
Long-Term Debt $5,289,000,000
Total Assets $9,409,000,000
Intangible Assets $2,744,000,000
Total Liabilities $10,685,000,000
Shares Outstanding (Diluted Average) 173,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.55
Dec2018 $5.62
Dec2017 -$0.95
Dec2016 $3.24
Dec2015 $3.02
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.87
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.38
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $2.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.46
Dec2018 $3.02
Dec2017 $2.13
Dec2016 $3.68
Dec2015 $3.85
Dec2014 $4.02
Dec2013 $3.06
Dec2012 $1.38
Dec2011 -$0.15
Dec2010 -$1.37
Dec2009 -$1.36
Dec2008 -$0.38
Dec2007 $5.97
Dec2006 $7.51
Dec2005 $4.08
Dec2004 -$0.75
Dec2003 -$2.91

Recommended Reading:

Other ModernGraham posts about the company

Motorola Solutions Inc Valuation – May 2018 $MSI
5 Undervalued Companies for Value Investors with a Low Beta – July 2017
5 Undervalued Companies for Value Investors with a Low Beta – January 2017
8 Best Stocks for Value Investors This Week – 12/27/16
Motorola Solutions Inc Valuation – December 2016 $MSI

Other ModernGraham posts about related companies

Gartner Inc Valuation – January 2019 $IT
Xerox Corp Valuation – January 2019 $XRX
Cognizant Technology Solutions Corp Valuation – January 2019 $CTSH
International Business Machines Corp Valuation – November 2018 $IBM
DXC Technology Corp Valuation – November 2018 $DXC
Sykes Enterprises Inc Valuation – October 2018 $SYKE
Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc Valuation – May 2018 $MSI

Company Profile (excerpt from Reuters): Motorola Solutions, Inc., incorporated on March 9, 1973, is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. It serves global customer base spanning federal, state, county, province, territory, municipal and departmental independent bodies, along with its commercial and industrial customers.

MSI Chart

MSI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,707,418,048 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.35 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 68.87% Pass
6. Moderate PEmg Ratio PEmg < 20 33.48 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -10.21 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.35 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.34 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.28
MG Growth Estimate -2.75%
MG Value $9.82
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $47.56
MG Value based on 0% Growth $27.88
Market Implied Growth Rate 12.49%
Current Price $109.83
% of Intrinsic Value 1118.45%

Motorola Solutions Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.02 in 2014 to an estimated $3.28 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.49% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Motorola Solutions Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.93 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 33.48, which was below the industry average of 42.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.04.

Motorola Solutions Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.04
Graham Number $0.00
PEmg 33.48
Current Ratio 1.35
PB Ratio -10.21
Current Dividend $1.93
Dividend Yield 1.76%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $3,950,000,000
Total Current Liabilities $2,931,000,000
Long-Term Debt $4,419,000,000
Total Assets $8,208,000,000
Intangible Assets $1,799,000,000
Total Liabilities $9,950,000,000
Shares Outstanding (Diluted Average) 162,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.39
Dec2017 -$0.95
Dec2016 $3.24
Dec2015 $3.02
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.87
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.38
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $2.87
Dec1998 -$3.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.28
Dec2017 $2.13
Dec2016 $3.68
Dec2015 $3.85
Dec2014 $4.02
Dec2013 $3.06
Dec2012 $1.38
Dec2011 -$0.15
Dec2010 -$1.37
Dec2009 -$1.36
Dec2008 -$0.38
Dec2007 $5.97
Dec2006 $7.51
Dec2005 $4.08
Dec2004 -$0.75
Dec2003 -$2.91
Dec2002 -$4.91

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for Value Investors with a Low Beta – July 2017
5 Undervalued Companies for Value Investors with a Low Beta – January 2017
8 Best Stocks for Value Investors This Week – 12/27/16
Motorola Solutions Inc Valuation – December 2016 $MSI
5 Undervalued Companies for Value Investors with a Low Beta – December 2016

Other ModernGraham posts about related companies

Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT
LivePerson Inc Valuation – Initial Coverage $LPSN
LogMeIn Inc Valuation – Initial Coverage $LOGM
Sykes Enterprises Inc Valuation – Initial Coverage $SYKE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc Valuation – December 2016 $MSI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Motorola Solutions Inc (MSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Motorola Solutions, Inc. is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. Its Products segment offers a portfolio of infrastructure, devices, accessories and software. The Products segment has two product lines, including Devices and Systems. Its Devices includes two-way portable radios and vehicle-mounted radios; accessories, such as speaker microphones, batteries, earpieces, headsets, carry cases and cables, and software features and upgrades. Its Systems includes the radio network core and central processing software; base stations; consoles; repeaters, and software applications and features. Its Services segment provides a range of service offerings for government, public safety and commercial communication networks. The Services segment product lines include Integration services, Managed & Support services, and Integrated Digital Enhanced Network (iDEN) services.

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,912,693,872 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.76 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -189.38% Fail
6. Moderate PEmg Ratio PEmg < 20 22.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -21.62 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.82
MG Growth Estimate 15.00%
MG Value $146.89
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $55.32
MG Value based on 0% Growth $32.43
Market Implied Growth Rate 6.76%
Current Price $84.00
% of Intrinsic Value 57.19%

Motorola Solutions Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.38 in 2012 to an estimated $3.82 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.76% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Motorola Solutions Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.64 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 22.02, which was below the industry average of 38.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-32.28.

Motorola Solutions Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$32.28
Graham Number $0.00
PEmg 22.02
Current Ratio 1.76
PB Ratio -21.62
Current Dividend $1.64
Dividend Yield 1.95%
Number of Consecutive Years of Dividend Growth 6

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $3,804,000,000
Total Current Liabilities $2,161,000,000
Long-Term Debt $5,044,000,000
Total Assets $8,619,000,000
Intangible Assets $1,366,000,000
Total Liabilities $9,278,000,000
Shares Outstanding (Diluted Average) 169,600,000

Earnings Per Share History

Next Fiscal Year Estimate $3.64
Dec2015 $3.02
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.87
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.48
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $2.87
Dec1998 -$3.08
Dec1997 $4.55
Dec1996 $4.41

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.82
Dec2015 $3.85
Dec2014 $4.02
Dec2013 $3.06
Dec2012 $1.38
Dec2011 -$0.15
Dec2010 -$1.37
Dec2009 -$1.36
Dec2008 -$0.37
Dec2007 $5.99
Dec2006 $7.53
Dec2005 $4.10
Dec2004 -$0.71
Dec2003 -$2.91
Dec2002 -$4.88
Dec2001 -$2.60
Dec2000 $2.40

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – August 2016
5 Undervalued Companies with a Low Beta – July 2016
5 Undervalued Companies with a Low Beta – May 2016
5 Undervalued Companies with a Low Beta – February 2016
26 Best Stocks For Value Investors This Week – 2/6/16

Other ModernGraham posts about related companies

Acxiom Corporation Valuation – November 2016 $ACXM
ACI Worldwide Inc Valuation – November 2016 $ACIW
Equinix Inc Valuation – August 2016 $EQIX
Qualcomm Inc Valuation – August 2016 $QCOM
Verisign Inc Valuation – August 2016 $VRSN
Akamai Technologies Inc Valuation – August 2016 $AKAM
Motorola Solutions Inc Valuation – August 2016 $MSI
F5 Networks Inc Valuation – July 2016 $FFIV
Computer Sciences Corp Valuation – July 2016 $CSC
Infosys Ltd Valuation – July 2016 $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc Valuation – August 2016 $MSI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Motorola Solutions Inc (MSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Motorola Solutions, Inc. is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. Its Products segment offers a portfolio of infrastructure, devices, accessories and software. The Products segment has two product lines, including Devices and Systems. Its Devices includes two-way portable radios and vehicle-mounted radios; accessories, such as speaker microphones, batteries, earpieces, headsets, carry cases and cables, and software features and upgrades. Its Systems includes the radio network core and central processing software; base stations; consoles; repeaters, and software applications and features. Its Services segment provides a range of service offerings for government, public safety and commercial communication networks. The Services segment product lines include Integration services, Managed & Support services, and Integrated Digital Enhanced Network (iDEN) services.

MSI Chart

MSI data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,429,048,584 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -194.84% Fail
6. Moderate PEmg Ratio PEmg < 20 18.11 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -88.50 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.55 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MSI value chart August 2016

EPSmg $4.06
MG Growth Estimate 15.00%
MG Value $156.26
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $58.85
MG Value based on 0% Growth $34.50
Market Implied Growth Rate 4.80%
Current Price $73.50
% of Intrinsic Value 47.04%

Motorola Solutions Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.38 in 2012 to an estimated $4.06 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.8% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Motorola Solutions Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.5 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 18.11, which was below the industry average of 35.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-29.35.

Motorola Solutions Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

MSI charts August 2016

Net Current Asset Value (NCAV) -$29.35
Graham Number $0.00
PEmg 18.11
Current Ratio 1.97
PB Ratio -88.50
Current Dividend $1.50
Dividend Yield 2.04%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $4,001,000,000
Total Current Liabilities $2,032,000,000
Long-Term Debt $5,023,000,000
Total Assets $9,049,000,000
Intangible Assets $1,259,000,000
Total Liabilities $9,196,000,000
Shares Outstanding (Diluted Average) 177,000,000

Earnings Per Share History

Next Fiscal Year Estimate $4.37
Dec2015 $3.02
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.89
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.48
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $3.06
Dec1998 -$3.76
Dec1997 $4.53
Dec1996 $4.43

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.06
Dec2015 $3.85
Dec2014 $4.02
Dec2013 $3.07
Dec2012 $1.38
Dec2011 -$0.14
Dec2010 -$1.36
Dec2009 -$1.36
Dec2008 -$0.37
Dec2007 $5.99
Dec2006 $7.53
Dec2005 $4.10
Dec2004 -$0.71
Dec2003 -$2.89
Dec2002 -$4.90
Dec2001 -$2.66
Dec2000 $2.32

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – August 2016
5 Undervalued Companies with a Low Beta – July 2016
5 Undervalued Companies with a Low Beta – May 2016
5 Undervalued Companies with a Low Beta – February 2016
26 Best Stocks For Value Investors This Week – 2/6/16

Other ModernGraham posts about related companies

F5 Networks Inc Valuation – July 2016 $FFIV
Computer Sciences Corp Valuation – July 2016 $CSC
Infosys Ltd Valuation – July 2016 $INFY
Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH
Total System Services Inc Valuation – May 2016 $TSS
Qualcomm Inc Valuation – February 2016 $QCOM
Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc Valuation – February 2016 Update $MSI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Motorola Solutions Inc (MSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Motorola Solutions, Inc. provides communication infrastructure, devices, accessories, software and services. The Company operates business in two segments: Products and Services. The Products segment offers a portfolio of infrastructure, devices, accessories and software. The primary customers of the Products segment are Government, public safety and first-responder agencies, municipalities, and commercial and industrial customers. The Products segment has two principal product lines: devices and systems. The Services segment provides a set of service offerings for Government, public safety and commercial communication networks. The Services segment has the following principal product lines: Integration services, Lifecycle Support services, Managed services, Smart Public Safety Solutions and Integrated Digital Enhanced Network (iDEN) services. The Company serves customers in more than 100 countries.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – February 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,384,620,155 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -496.01% Fail
6. Moderate PEmg Ratio PEmg < 20 17.40 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -42.23 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.59 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MSI value Chart February 2016

EPSmg $3.70
MG Growth Estimate 15.00%
MG Value $142.50
Opinion Undervalued
MG Value based on 3% Growth $53.67
MG Value based on 0% Growth $31.46
Market Implied Growth Rate 4.45%
Current Price $64.41
% of Intrinsic Value 45.20%

Motorola Solutions Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the inconsistent dividend history, and the high PB ratio.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $0.15 in 2011 to an estimated gain of $3.70 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.45% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Stage 3: Information for Further Research

MSI Charts February 2016

Net Current Asset Value (NCAV) -$17.91
Graham Number #NUM!
PEmg 17.40
Current Ratio 2.36
PB Ratio -42.23
Dividend Yield 2.11%
Number of Consecutive Years of Dividend Growth 5

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $4,787,000,000
Total Current Liabilities $2,029,000,000
Long-Term Debt $4,386,000,000
Total Assets $8,086,000,000
Intangible Assets $473,000,000
Total Liabilities $8,393,000,000
Shares Outstanding (Diluted Average) 201,300,000

Earnings Per Share History

Next Fiscal Year Estimate $2.57
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.87
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.38
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $2.87
Dec1998 -$3.52
Dec1997 $4.55
Dec1996 $4.41

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.70
Dec2014 $4.02
Dec2013 $3.06
Dec2012 $1.38
Dec2011 -$0.15
Dec2010 -$1.37
Dec2009 -$1.36
Dec2008 -$0.38
Dec2007 $5.97
Dec2006 $7.51
Dec2005 $4.08
Dec2004 -$0.75
Dec2003 -$2.91
Dec2002 -$4.91
Dec2001 -$2.66
Dec2000 $2.32
Dec1999 $1.52

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – January 2016
Motorola Solutions Inc. Valuation – November 2015 Update $MSI
5 Undervalued Companies with a Low Beta – October 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15
Motorola Solutions Inc. Analysis – July 2015 Update $MSI

Other ModernGraham posts about related companies

Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY
Total System Services Inc. Valuation – November 2015 Update $TSS
International Business Machines Corp Valuation – November 2015 Update $IBM
Motorola Solutions Inc. Valuation – November 2015 Update $MSI
Qualcomm Inc. Valuation – October 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
Infosys Limited Analysis – October 2015 Update $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc. Valuation – November 2015 Update $MSI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Motorola Solutions Inc. (MSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Motorola Solutions, Inc. provides communication infrastructure, devices, accessories, software and services. The Company operates business in two segments: Products and Services. The Products segment offers a portfolio of infrastructure, devices, accessories and software. The primary customers of the Products segment are Government, public safety and first-responder agencies, municipalities, and commercial and industrial customers. The Products segment has two principal product lines: devices and systems. The Services segment provides a set of service offerings for Government, public safety and commercial communication networks. The Services segment has the following principal product lines: Integration services, Lifecycle Support services, Managed services, Smart Public Safety Solutions and Integrated Digital Enhanced Network (iDEN) services. The Company serves customers in more than 100 countries.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,774,218,162 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.86 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -512.96% Fail
6. Moderate PEmg Ratio PEmg < 20 18.46 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.25 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.93 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MSI value Chart November 2015

EPSmg $3.87
MG Growth Estimate 15.00%
MG Value $149.05
Opinion Undervalued
MG Value based on 3% Growth $56.13
MG Value based on 0% Growth $32.91
Market Implied Growth Rate 4.98%
Current Price $71.45
% of Intrinsic Value 47.94%

Motorola Solutions Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the inconsistent dividend record as well as the high PB ratio.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $0.15 in 2011 to an estimated gain of $3.87 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.98% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Motorola Solutions Inc. (MSI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MSI Charts November 2015

Net Current Asset Value (NCAV) -$8.18
Graham Number $24.67
PEmg 18.46
Current Ratio 2.86
PB Ratio 8.25
Dividend Yield 1.90%
Number of Consecutive Years of Dividend Growth 5

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $5,632,000,000
Total Current Liabilities $1,971,000,000
Long-Term Debt $3,393,000,000
Total Assets $9,160,000,000
Intangible Assets $475,000,000
Total Liabilities $7,345,000,000
Shares Outstanding (Diluted Average) 209,500,000

Earnings Per Share History

Next Fiscal Year Estimate $3.08
Dec14 $5.29
Dec13 $4.06
Dec12 $2.96
Dec11 $3.41
Dec10 $1.87
Dec09 -$0.14
Dec08 -$13.09
Dec07 -$0.14
Dec06 $10.22
Dec05 $12.67
Dec04 $4.38
Dec03 $2.66
Dec02 -$7.63
Dec01 -$12.46
Dec00 $4.06
Dec99 $2.87
Dec98 -$3.52
Dec97 $4.55
Dec96 $4.41
Dec95 $7.91

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.87
Dec14 $4.02
Dec13 $3.06
Dec12 $1.38
Dec11 -$0.15
Dec10 -$1.37
Dec09 -$1.36
Dec08 -$0.38
Dec07 $5.97
Dec06 $7.51
Dec05 $4.08
Dec04 -$0.75
Dec03 -$2.91
Dec02 -$4.91
Dec01 -$2.66
Dec00 $2.32
Dec99 $2.04

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – October 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15
Motorola Solutions Inc. Analysis – July 2015 Update $MSI
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – June 2015
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – May 2015

Other ModernGraham posts about related companies

Qualcomm Inc. Valuation – October 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
Infosys Limited Analysis – October 2015 Update $INFY
Teradata Corporation Analysis – September 2015 Update $TDC
Akamai Technologies Inc. Analysis – August 2015 Update $AKAM
Total System Services Inc. Analysis – August 2015 Update $TSS
Acxiom Corporation Analysis – Initial Coverage $ACXM
ACI Worldwide Inc. Analysis – Initial Coverage $ACIW
Motorola Solutions Inc. Analysis – July 2015 Update $MSI
Qualcomm Inc. Analysis – July 2015 Update $QCOM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Motorola Solutions Inc. Analysis – July 2015 Update $MSI

Motorola_solutions_logoMotorola Solutions (MSI) has shown significant earnings growth over the last several years, a factor that immediately attracts some investors. In addition, the company’s strong dividend yield will intrigue potential investors. These qualitative issues are excellent to consider in the final stages of an investment decision, but first one must use quantitative metrics to determine the company’s intrinsic value.

Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

[level-free]
To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
[/level-free]
[level-mg-stocks-screens-subscriber]

Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – Has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – FAIL
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $58.92
MG Value $143.66
MG Opinion Undervalued
Value Based on 3% Growth $54.10
Value Based on 0% Growth $31.72
Market Implied Growth Rate 3.65%
Net Current Asset Value (NCAV) -$6.68
PEmg 15.79
Current Ratio 2.98
PB Ratio 6.15

Balance Sheet – March 2015

Current Assets $5,884,000,000
Current Liabilities $1,977,000,000
Total Debt $3,392,000,000
Total Assets $9,425,000,000
Intangible Assets $428,000,000
Total Liabilities $7,339,000,000
Outstanding Shares 217,800,000

Earnings Per Share

2015 (estimate) $2.66
2014 $5.29
2013 $4.06
2012 $2.96
2011 $3.41
2010 $1.87
2009 -$0.14
2008 -$13.09
2007 -$0.14
2006 $10.22
2005 $12.67

Earnings Per Share – ModernGraham

2015 (estimate) $3.73
2014 $4.02
2013 $3.06
2012 $1.38
2011 -$0.15
2010 -$1.37

Dividend History

Free Cash Flow History

Conclusion

Motorola Solutions is not suitable for Defensive Investors but it does pass the initial requirements of the Enterprising Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the inconsistent dividend history, and the high PB ratio, while the Enterprising Investor has no initial concerns. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, it has grown its EPSmg (normalized earnings) from a loss of $0.15 in 2011 to an estimated gain of $3.73 for 2015. This is a robust level of demonstrated growth and outpaces the market’s implied estimate for annual earnings growth of 3.65% over the next 7-10 years.

In recent years, the company’s actual growth in EPSmg has averaged significantly higher than the market’s estimate, and while the ModernGraham valuation model reduces the actual growth to a more conservative figure when making an estimate, the model still returns an estimate of intrinsic value well above the current price, indicating that Motorola Solutions is significantly undervalued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Motorola Solutions Inc. Quarterly Valuation – April 2015 $MSI

Motorola_solutions_logoMotorola Solutions Inc. (NYSE:MSI) has shown very strong earnings growth over the last several years, which will immediately intrigue many investors. However, Benjamin Graham, the father of value investing, taught that investors must take emotion out of the equation, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

MSI Chart

MSI data by YCharts

[level-free]
To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
[/level-free]
[level-mg-stocks-screens-subscriber]

Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – Has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – Earnings per share has increased by at least 1/3 over the last 10 years, using 3-year averages at the beginning and end of the period – FAIL
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $61.91
MG Value $154.67
MG Opinion Undervalued
Value Based on 3% Growth $58.25
Value Based on 0% Growth $34.15
Market Implied Growth Rate 3.46%
Net Current Asset Value (NCAV) -$3.53
PEmg 15.41
Current Ratio 3.06
PB Ratio 5.19

Balance Sheet – December 2014

Current Assets $6,879,000,000
Current Liabilities $2,250,000,000
Total Debt $3,396,000,000
Total Assets $10,423,000,000
Intangible Assets $406,000,000
Total Liabilities $7,688,000,000
Outstanding Shares 229,100,000

Earnings Per Share

2014 $5.29
2013 $4.06
2012 $2.96
2011 $3.41
2010 $1.87
2009 -$0.14
2008 -$13.09
2007 -$0.14
2006 $10.22
2005 $12.67
2004 $4.48

Earnings Per Share – ModernGraham

2014 $4.02
2013 $3.06
2012 $1.38
2011 -$0.15
2010 -$1.37
2009 -$1.36

Dividend History

MSI Dividend Chart

MSI Dividend data by YCharts

Conclusion

Motorola Solutions performs well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the insufficient earnings growth or stability over the last ten years, inconsistent dividend record, and the high PB ratios, while the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from a loss of $1.37 in 2010 to a gain of $4.02 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of 3.46% annual earnings growth over the next 7-10 years. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still estimates a growth figure much higher than the market’s implied rate. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

[/level-mg-stocks-screens-subscriber]

Motorola Solutions Inc. Quarterly Valuation – January 2015 $MSI

Motorola_solutions_logo

Motorola Solutions Inc. does fairly well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the lack of earnings stability or sufficient growth over the last ten years, inconsistent dividend history and the high PEmg and PB ratios, while the less conservative Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from a loss of $1.37 in 2010 to an estimated gain of $2.99 for 2014. This is a strong level of demonstrated growth which is well above the market’s implied estimate of 6.7% annual earnings growth over the next 7-10 years. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Motorola Solutions Inc. (MSI) for greater perspective!

Read the full valuation on Seeking Alpha!

MSI Chart

MSI data by YCharts

Disclaimer:  The author did not hold a position in Motorola Solutions Inc. (MSI) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Motorola Solutions Inc. Quarterly Stock Valuation – October 2014 $MSI

Motorola_solutions_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Highest Dividend Yields Among Undervalued Companies for the Defensive Investor – September 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Motorola Solutions Inc. (MSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Motorola Solutions, Inc. (Motorola Solutions) provides communication infrastructure, devices, software and services. The Company provides these products and services for enterprise and government customers worldwide. The Company operates in two segments: Government and Enterprise. The Government segment includes sales of public safety communications systems, commercial two-way radio systems and devices, software and services. The Enterprise segment includes sales of rugged and enterprise-grade mobile computers and tablets, laser/imaging/RFID-based data capture products, wireless local area network (WLAN) and integrated digital enhanced network (iDEN) infrastructure, software and services. In January 2014, the Company announced that it has acquired Twisted Pair Solutions, a provider of push-to-talk over broadband applications for secure, real-time communication anywhere, on any device.
MSI Chart

MSI data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $61.30
MG Value $104.95
MG Opinion Undervalued
Value Based on 3% Growth $39.53
Value Based on 0% Growth $23.17
Market Implied Growth Rate 6.99%
Net Current Asset Value (NCAV) -$2.64
PEmg 22.49
Current Ratio 2.42
PB Ratio 3.72

Balance Sheet – 6/28/2014

Current Assets $7,066,000,000
Current Liabilities $2,924,000,000
Total Debt $2,446,000,000
Total Assets $11,868,000,000
Intangible Assets $407,000,000
Total Liabilities $7,729,000,000
Outstanding Shares 250,900,000

Earnings Per Share

2014 (estimate) $2.14
2013 $4.06
2012 $2.95
2011 $2.20
2010 $0.70
2009 -$0.35
2008 -$13.09
2007 -$0.35
2006 $9.10
2005 $12.74
2004 $6.30

Earnings Per Share – ModernGraham

2014 (estimate) $2.73
2013 $2.65
2012 $0.79
2011 -$0.92
2010 -$1.92
2009 -$1.61

Dividend History
MSI Dividend Chart

MSI Dividend data by YCharts

Conclusion:

Motorola Solutions Inc. is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor has numerous concerns regarding the lack of earnings stability or growth over the last ten years, the unstable dividend history, and the high PEmg and PB ratios.  The company passes all of the Enterprising Investor’s requirements, though.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities. From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $1.92 in 2010 to an estimated gain of $2.73 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 6.99% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out the previous ModernGraham valuations of Motorola Solutions Inc. (MSI) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Motorola Solutions Inc. (MSI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Motorola Solutions Inc. (MSI) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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