Today, Motorola Solutions has released its 10-K report. The company provides public safety and enterprise security solutions globally, operating in two segments: Products and Systems Integration, and Software and Services. For the year ended December 31, 2023, the company reported net sales of $9.978 billion, representing a 10% increase from the previous year. Gross margin improved to 49.8% of net sales, up from 46.4% in 2022. Operating earnings saw a significant increase of 38% to $2.294 billion.
The Products and Systems Integration segment's net sales increased by 9%, driven by growth in land mobile radio (LMR) and video, while the Software and Services segment saw a 10% increase, led by growth in LMR services, command center, and video. The company reported a decrease in selling, general and administrative expenses by 8% and a 10% increase in research and development expenditures. The effective tax rate for 2023 was 20.1%, up from 9.8% in 2022.
In comparison to 2021, net sales for 2022 increased by 12%, with the gross margin decreasing to 46.4% of net sales. The Products and Systems Integration segment saw a 14% increase in net sales, driven by growth in public safety LMR products and video, while the Software and Services segment reported an 8% increase, driven by growth in video, LMR services, and command center.
For more information, read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $7,343 | $7,887 | $7,414 | $8,171 | $9,112 | $9,837 |
| Gross Margins | 47% | 50% | 49% | 49% | 46% | 49% |
| Net Margins | 13% | 11% | 13% | 15% | 15% | 17% |
| Net Income (M) | $966 | $868 | $949 | $1,245 | $1,363 | $1,702 |
| Net Interest Expense (M) | -$222 | -$220 | -$220 | -$208 | -$226 | -$218 |
| Depreciation & Amort. (M) | $360 | $394 | $409 | $438 | $440 | $380 |
| Diluted Shares (M) | 172 | 176 | 174 | 174 | 172 | 172 |
| Earnings Per Share | $5.62 | $4.95 | $5.45 | $7.17 | $7.93 | $9.89 |
| EPS Growth | n/a | -11.92% | 10.1% | 31.56% | 10.6% | 24.72% |
| Avg. Price | $106.73 | $145.59 | $149.08 | $210.22 | $220.84 | $324.36 |
| P/E Ratio | 17.94 | 27.94 | 26.72 | 28.56 | 27.13 | 31.89 |
| Free Cash Flow (M) | $878 | $1,575 | $1,396 | $1,594 | $1,567 | $1,827 |
| EV / EBITDA | 13.18 | 14.17 | 16.38 | 18.69 | 19.91 | 20.8 |
| Total Debt (M) | $5,320 | $5,129 | $5,175 | $5,693 | $6,014 | $1,313 |
| Net Debt / EBITDA | 2.52 | 2.09 | 2.19 | 1.81 | 2.23 | 0.15 |
| Current Ratio | 1.38 | 1.21 | 1.24 | 1.33 | 1.15 | 0.95 |
The stock of Motorola Solutions (MSI) appears to be undervalued at its current price of $323.9 per share due to its strong revenue growth and competitive operating and gross margins compared to industry averages. The company's earnings per share have also shown consistent growth over the past six years. However, MSI's flat capital expenditure trend and a PEG ratio above 2 suggest that the market may be overvaluing its growth potential.
In terms of value factors, Motorola Solutions faces challenges with its current assets not fully covering its current liabilities, as indicated by a current ratio of 0.95. Additionally, the company's P/E and P/B ratios are above industry averages, leading to the conclusion that the stock is trading at a premium compared to its fair value. Despite this, MSI's forward P/E ratio of 23.4 based on its earnings guidance indicates a potential for a lower valuation in the future.
It's essential to note that this analysis is not personalized financial advice and should be considered within the context of an individual's specific financial situation and goals.
