Following the first quarter earnings announcement on April 25,
none of the analysts covering
Motorola Solutions Inc.
) have made any revisions to their estimates. The brokers have
retained their estimates based on the belief that the company will
do well in the government segment but remain concerned about the
increasing competitive scenario in the enterprise segment.
First Quarter Highlights
On a GAAP basis, quarterly net income was $159 million or 50
cents per share, compared with $367 million or $1.07 per share in
the year-ago quarter. Adjusted EPS of 50 cents was well ahead of
the Zacks Consensus Estimate of 47 cents.
Quarterly total revenue of $1,956 million was up 6.7% year over
year, and marginally above the Zacks Consensus Estimate of $1,918
million. Operating margin was 11.9% compared with 9.2% in the
Agreement of Analysts
Of the 5 analysts covering the stock in the last 7 days, none
have revised the estimates for the second quarter of 2012.
Similarly, for the third quarter of 2012, none of the 5 analysts
covering the stock have made any changes to their estimates.
For fiscal 2012, out of the 6 analysts covering the stock in the
last 7 days, none have revised their estimates. The trend is
similar for fiscal 2013 as well, where none of the 6 analysts
covering the stock have revised their estimates.
Currently, the Zacks Consensus Estimate for the second quarter
of fiscal 2012 is 62 cents, with a projected annual growth of
9.12%. For the third quarter of fiscal 2012, the Zacks Consensus
Estimate of 69 cents indicates an annual gain of 23.93%.
Magnitude of Estimate Revisions
As a result of analysts' reluctance to revise estimates either
way over the past 7 days, the Zacks Consensus Estimates for the
second and third quarter of 2012 has remained static at 62 and 69
cents per share, respectively. Similarly for fiscal 2012 and 2013,
the current Zacks Consensus Estimates has remained unchanged over
the past week at $2.77 and $3.32,
The company has outdone the Zacks Consensus estimates in all of
the four previous quarters. In the first quarter of 2012, Motorola
Solutions outpaced the estimate by 3 cents or 6.38%.
The estimates for the ongoing quarter of fiscal 2012 contain a
downside risk of 1.61%, while the estimates for the third quarter
of 2012 contain a downside risk of 1.45% (essentially a proxy for
future earnings surprises). Fiscal 2012 estimates contain a
downside risk of 1.44%, while the estimates for fiscal 2013 contain
a downside risk of 5.42%.
We believe that Motorola Solution will benefit from the U.S.
government's initiative to build a nationwide super-fast public
safety network. The company has inked a deal with
) to install a public safety broadband network based on the
Verizon's nationwide LTE network, which will act as a positive
catalyst for Motorola Solutions.
Moreover, Motorola Solutions caters to a large set of industries
including Transportation & Logistics, Public safety,
Hospitality, Retail, Oil & natural gas and more, which creates
significant opportunities for the company.
However, the ongoing macroeconomic uncertainty may restrict
government spending, which might act as a headwind for the company
as Motorola derives a major part of its revenue from the government
) decision to gradually phase out iDEN network will hamper its
future prospects. Pending legal issues in several European
countries act as an added concern for Motorola Solutions.
Considering these factors, we maintain our long-term Neutral
recommendation on Motorola Solutions. Currently, Motorola Solutions
has a Zacks #2 Rank, implying a short-term buy rating on the
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
MOTOROLA SOLUTN (MSI): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.