On Feb 21, 2014, we issued an updated research report on Motorola Solutions Inc. (MSI). The company posted impressive financial results for the fourth quarter of 2013 on continuous contract wins and innovative product launches. However, the company slashed its outlook for first-quarter fiscal 2014.
Motorola Solutions has delivered positive earnings surprise in three of the last four quarters, with an average surprise of negative 12.14%. The company reported better financial results for the fourth quarter of fiscal 2013 with both the top and the bottom line beating the respective Zacks Consensus Estimate.
Motorola Solutions remains quite optimistic regarding its future growth. In addition to the U.S., the Middle East provides significant market potential. The company has already won few international public safety LTE deals of which nearly 40% span over 10 years.
Moreover, the acquisition of Twisted Pair Solutions – which offers a standard communications platform used in critical situations by military, government and private enterprises worldwide – will significantly enhance revenues at the Government Solutions segment.
Notably, Motorola Solutions exited fiscal 2013 with $3.2 billion of cash as compared with $1.4 billion at the end of 2012. Such a strong cash position has allowed the company to drive shareholders return by means of paying regular dividends and repurchasing shares.
However, the decision of Sprint Corp. (S) to gradually phase out iDEN network is a setback for Motorola Solutions. Sprint has started eliminating iDEN networks in 2013 and the total phase out will take 3 to 4 years.
Moreover, Motorola Solutions is heavily dependent on government expenditures for its revenues as 70% of its total sales is generated from government agencies. Reduction in government expenditure and macroeconomic fluctuations are likely to affect sales of the company.
Motorola Solutions currently has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Other stocks worth considering in this sector include Nokia Corporation (NOK) and Harris Corp. (HRS). Both Nokia and Harris have a Zacks Rank #2 (Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment