Motorola Solutions’ record backlog of $14.7 billion provides exceptional visibility into future revenue streams, while its software and services segment delivers higher margins to boost overall profitability. Strategic acquisitions focus on expanding the company’s technological capabilities and markets, particularly in areas that complement its core government and public safety business.
The company’s integration of AI across its product portfolio positions it at the forefront of next-generation safety and security solutions. These range from AI-powered video analytics to voice communications. The unique ecosystem approach provides comprehensive solutions that address ongoing and complex customer challenges rather than merely selling individual products.
Meanwhile the stock trades at 27.6 times the company’s forward earnings forecast. We feel this multiple is very reasonable considering the firm’s strong growth projections and high R&D spending to stay in its dominant market position.
MOTOROLA SOLUTIONS INC. (New York symbol MSI; www.motorolasolutions.com) makes communications equipment such as two-way radios for police and fire vehicles, as well as high-definition surveillance systems. It also makes software that helps governments manage their emergency response call centres.
The company gets 60% of its revenue from selling hardware, and 40% from software and services. Its biggest single market is the U.S. at 69% of revenue, followed by the U.K. (5%) and Canada (4%). Other countries supplied the remaining 22%.
The company continues to win new contracts. For example, four U.K. fire and rescue services, which together operate 77 fire stations, will use Motorola’s Control Room Solution software to improve their response times to fires and other emergencies.
Deals like this are part of Motorola’s plan to expand its services operations. That gives it recurring revenue streams and cuts its reliance on selling hardware.
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Meanwhile, Motorola tends to fuel its growth with acquisitions. However, it cuts the risk of this strategy by focusing on smaller firms that enhance its technology and market share.
For example, it recently paid an undisclosed sum for Theatro Labs, Inc. Based in Richardson, Texas, this firm makes software that uses artificial intelligence tools to let workers in retail stores use conversational language to assist customers, and check inventory and pricing. The system also makes it easier for workers to discreetly alert management and security teams when they feel unsafe.
In addition to acquisitions, Motorola fuels its growth with investments in new products. Its research costs rose 6.9%, to $917 million (or 8.5% of revenue) in 2024 from $858 million (or 8.6% of revenue) in 2023.
Record backlog signals strong future revenue growth for Motorola
Thanks to partly to acquisitions like these, Motorola’s revenue rose 45.9%, from $7.41 billion in 2020 to $10.82 billion in 2024. Earnings before unusual items also jumped 76.6%, from $1.34 billion in 2020 to $2.37 billion in 2024. Due to fewer shares outstanding, per-share earnings rose at a faster rate of 80.0%, from $7.96 to $13.84.
The company’s strong balance sheet will let it keep investing in its businesses. It ended 2024 with cash of $2.10 billion, while its long-term debt of $5.68 billion is a low 8% of its market cap.
Motorola’s backlog was up 3% last year and stood at a record $14.7 billion at the end of 2024. That’s equal to 136% of its annual revenue.
That large backlog should increase revenue in 2025 by 6%. Earnings should also rise 6% to $14.73 a share, and the stock trades at 27.6 times that forecast. That’s a reasonable multiple considering Motorola’s high market share and research costs. As well, with the January 2025 payment, the company raised your quarterly dividend by 11.2%; as a result, the new annual rate of $4.36 a share yields 1.1%.
Recommendation in Wall Street Stock Forecaster: Motorola Solutions Inc. is a buy.
