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Motorola Solutions (MSI) Q4 Earnings: What's in the Cards?

Motorola Solutions, Inc.MSI is scheduled to report fourth-quarter 2016 results on Nov 2, after the market closes .

In the third quarter of 2016, Motorola Solutions posted a positive earnings surprise of 14.04%. The company has an impressive track record with respect to earnings. Motorola Solutions outpaced the Zacks Consensus Estimate in each of the last four quarters with an average beat of 15.72%.

The impressive earnings history of the company is reflected in its price performance over the last one year. During the period, the Motorola Solutions stock returned 24.11%, while the Wireless Equipment industry declined 8.66%.

Despite the impressive earnings history and price performance, our quantitative model does not conclusively show that Motorola Solutions is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here, as you will see below:

Despite the impressive earnings history and price performance, our quantitative model does not conclusively show that Motorola Solutions is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for the company is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.80. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Motorola Solutions has a Zacks Rank #3, which increases the predictive power of ESP. However, that alone is not sufficient to secure an earnings beat.

Conversely, we advise investors not to consider Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimates revisions.

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. Price and EPS Surprise | Motorola Solutions, Inc. Quote

Factors Likely at Play

We are impressed by the company's efforts to expand its product portfolio.The company's performance has been boosted by its acquisition of Airwave Solutions, which was completed last year. The Airwave Solutions buyout is expected to boost fourth-quarter revenues by about $120 million. Moreover, in November the company purchased Spillman Technologies that provided holistic law enforcement and public safety software solutions prior to being acquired. The buyout expanded Motorola's product portfolio significantly. Additionally, in September, the company acquired Wireless Technology Equipment Co. to broaden its mission-critical communication services in Florida.

Motorola Solutions expects revenues in the fourth quarter to improve in the range of 9-10%, on a year-over-year basis. Adjusted earnings per share in the fourth quarter are projected in the band of $1.82 to $1.87.

We are also impressed by Motorola's efforts to reward investors through dividend payments and buybacks. Nevertheless, we believe that costs related to the abovementioned acquisitions will hurt the bottom line of Motorola Solutions in the fourth quarter. Moreover, adverse foreign currency movements might hamper results in the fourth quarter. The company's high debt levels also remain a concern.

Stocks to Consider

Investors who are interested in the in the broader computer & technology sector may consider the following stocks. This is because our model shows that these companies too possess the right combination of elements to post an earnings beat this quarter.

ACI Worldwide, Inc. ACIW has a Zacks Rank #3 and an Earnings ESP of +1.89%. It is expected to report fourth-quarter 2016 results on Feb 23. You can see the complete list of today's Zacks #1 Rank stocks here .

Applied Materials Inc. AMAT carries a Zacks Rank #3 and an Earnings ESP of +6.06%. It is expected to report first-quarter fiscal 2017 results on Feb 16.

ARRIS International plc ARRS has a Zacks Rank #3 and an Earnings ESP of +1.56%. It is expected to report fourth-quarter 2016 results on Feb 15.

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ARRIS International PLC (ARRS): Free Stock Analysis Report

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Applied Materials, Inc. (AMAT): Free Stock Analysis Report

Motorola Solutions, Inc. (MSI): Free Stock Analysis Report

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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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