Motorola Solutions Inc.
(
MSI
) is slated to release its first quarter 2011 results on Wednesday,
April 25, before the opening bell. The current Zacks Consensus
Estimate for the first quarter is pegged at 47 cents, representing
an annualized growth of 1.3%.
With respect to earnings surprises over the trailing four
quarters, Motorola Solutions has outperformed the Zacks Consensus
Estimate in all the four quarters. The average earnings surprise
was positive 27.26%, implying that the company has outdone the
Zacks Consensus Estimate by the same magnitude over the last four
quarters.
Fourth Quarter Recap
Quarterly GAAP net income from continuing operation was $184
million or 54 cents per share compared with $292 million or 49
cents per share in the prior-year quarter. However, adjusted
(excluding special items) EPS in the fourth quarter of 2011 came in
at 78 cents, surpassing the Zacks Consensus Estimate of 74
cents.
Quarterly total revenue was $2,300 million, up 5% year over year
and marginally ahead of the Zacks Consensus Estimate of $2,286
million. Quarterly gross margin was 50.4% compared with 49.8% in
the prior-year quarter. Quarterly operating margin stood at 12%
versus 12.4% in the prior-year quarter.
Agreement of Estimate Revisions
In the last 30 days, out of the five analysts covering the
stock, none revised the estimate over the first quarter and second
quarter of 2012. Similarly, for fiscal 2012 and 2013, out of the 6
analysts covering the stock none raised or slashed the EPS
estimate.
Magnitude of Estimate Revisions
For the ongoing quarter of fiscal 2012, the current Zacks
Consensus Estimate was just a penny above the previous estimates of
46 cents. Likewise, for the second quarter of fiscal 2012, the
current Zacks Consensus Estimate was just a penny above the
previous estimates of 60 cents in the last 30 days.
For fiscal 2012, the current Zacks Consensus Estimate was in
line with the earlier estimate of $2.73. However, for fiscal 2013,
the current estimate is pegged at $3.27, which is also 4 cents
above the earlier estimate.
Earnings Surprises
The first and second quarter of 2012 represent a 4.26% and
14.75% downside potential (essentially a proxy for future earnings
surprises), respectively. Similarly, fiscal 2012 and 2013 reflect
4.26% and 14.75% downside potentials, respectively.
Our Take
Motorola's business model remains compelling and we believe that
the company will be able to maintain its current top-line growth
going forward, primarily due to the critical nature of the public
safety network in the U.S. and massive growth potential in the
Middle East. Furthermore, the company has entered into an
agreement with
Verizon Communication Inc.
(
VZ
) to install a standard-based public safety broadband network for
mission-critical operations leveraging on the nationwide LTE
network of Verizon, which we believe will act as a positive
catalyst for the stock going forward.
Currently, Motorola Solutions Inc. has a Zacks #2 Rank, implying
a short-term Buy rating.
MOTOROLA SOLUTN (
MSI
): Free Stock Analysis Report
VERIZON COMM (
VZ
): Free Stock Analysis Report
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