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Motorola (MSI) Hits Fresh Highs: Is There Still Room to Run?

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Have you been paying attention to shares of Motorola Solutions, Inc.MSI ? Shares have been on the move with the stock up 6.05% over the past month. MSI hit a new 52-week high of $109.18 in the previous session. Motorola Solutions has gained 20.48% since the start of the year compared to the 6.78% move for the Computer and Technology sector and the 4.44% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on February 1, 2018, Motorola Solutions reported EPS of $2.1 versus the Zacks Consensus Estimate of $2.03 while it beat the consensus revenue estimate by 0.56%.

For the current fiscal year, Motorola Solutions is expected to post earnings of $6.57 per share on $6.78 billion in revenues. This represents a 20.33% change in EPS on a 6.26% change in revenues. For the next fiscal year, the company is expected to earn $7.01 per share on $7.05 billion in revenues. This represents changes of 6.6% and 3.93%, respectively.

Valuation Metrics

Motorola Solutions may be at a 52-week high right now, but what might the future hold for MSI? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Motorola Solutions has a Value Score of B. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 16.56x current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.82x versus its peer group's average of 13.29x. Additionally, the stock has a PEG ratio of 2.07. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Motorola Solutions, Inc. Price and Consensus

Motorola Solutions, Inc. Price and Consensus | Motorola Solutions, Inc. Quote

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Motorola Solutions currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Motorola Solutions fits the bill. Thus, it seems as though MSI shares could have potential in the weeks and months to come.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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