Over the past six months, Motorola Solutions’s stock price fell to $405.04. Shareholders have lost 7.9% of their capital, which is disappointing considering the S&P 500 has climbed by 10.2%. This may have investors wondering how to approach the situation.
Given the weaker price action, is now a good time to buy MSI? Find out in our full research report, it’s free.
Why Is Motorola Solutions a Good Business?
Born from the company that invented the first portable handheld police radio in 1940, Motorola Solutions (NYSE:MSI) provides mission-critical communications, video security, and command center software solutions for public safety agencies and enterprise customers.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Motorola Solutions’s sales grew at a solid 8.5% compounded annual growth rate over the last five years. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Motorola Solutions has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 18.8% over the last five years.
3. Stellar ROIC Showcases Lucrative Growth Opportunities
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
Motorola Solutions’s five-year average ROIC was 33%, placing it among the best business services companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.
Final Judgment
These are just a few reasons why we think Motorola Solutions is a great business. With the recent decline, the stock trades at 25.7× forward P/E (or $405.04 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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