Motorola’s exceptional market performance is driven by its dominant position in mission-critical communications and successful integration of artificial intelligence (AI) technologies. This leadership is further validated by consistent revenue growth and strategic acquisitions that enhance its product portfolio.
The firm remains a solid long-term buy as it continues to beat expectations, innovate for competitive advantage and maintain strong operating cash flow.
The stock trades at 31.4 times the company’s forward earnings forecast, which seems high until you factor in its market dominance and 48.0% the shares have returned so far in 2024. It’s a subscriber favourite!
MOTOROLA SOLUTIONS INC. (New York symbol MSI; www.motorolasolutions.com) makes specialized 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.
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 or its presence in certain markets.
Some of its latest purchases include spending $553 million for Rave Mobile Safety, a maker of software to help public safety agencies communicate and collaborate during emergencies. The platform is also used by thousands of K-12 schools and higher education institutions across the U.S. Rave’s panic button solution can immediately provide real-time incident details and essential data like location to 9-1-1 call takers and first responders, and its incident management solution helps to coordinate the emergency response across school safety personnel, administrators and first responders.
Motorola also spent $388 million for Ava Security, which specializes in cloud-based video analysis.
As well, the company paid an undisclosed sum for IPVideo. This private company is the creator of the HALO Smart Sensor, a multi-functional device that can detect a wide range of safety threats, including smoke, abnormal noise and motion. This product is mainly for areas not suitable for traditional surveillance cameras due to privacy concerns, such as restrooms, hotel rooms and hospitals. This acquisition complements Motorola’s other products, and increases the appeal of its security systems.
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Meanwhile, the company paid an undisclosed sum for Noggin earlier this year. Based in Sydney, Australia, this firm makes cloud-based software that helps businesses and public safety agencies manage disruptions to their computer networks caused by natural disasters and other events. Its products also help clients, including governments, airports and hospitals, quickly restore their systems.
The purchase is part of Motorola’s plan to expand its services operations. That gives it recurring revenue streams and cuts its reliance on selling hardware.
The company also 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.
Growth Stocks: Strategic AI integration enhances Motorola’s product portfolio
A key focus for Motorola is integrating artificial intelligence (AI) software into its products.
For example, the company has launched a new AI-powered video surveillance system that can better detect firearms in public places such as sports arenas. AI technology will also help its clients prevent unauthorized access to their premises and to better anticipate failures of monitoring equipment like cameras and sensors.
The firm reported that revenue in the third quarter ended September 28, 2024, rose 9.2%, to $2.79 billion from $2.56 billion a year earlier. That’s due to higher demand for its radio and video systems, as well as its software products. Earnings before one-time items increased 17.2%, to $3.74 a share from $3.19.
Motorola’s stock has gained 48% so far in 2024, and hit a new all-time high of $507.82 on November 11, 2024. It now trades at 31.4 times the $14.73 a share that the company is forecast to earn in 2025. That’s a reasonable multiple in light of the company’s high research spending (9% of revenue) and strong brand.
The company will also raise your quarterly dividend by 11.2%. Starting with the January 2025 payment, investors will receive $1.09 a share instead of $0.98. The new annual rate of $4.36 yields 0.9%.
Recommendation in Wall Street Stock Forecaster: Motorola Solutions Inc. is a buy.
