Will Modest Top-Line Growth Aid Motorola (MSI) Q4 Earnings?
Motorola Solutions, Inc. MSI is scheduled to report fourth-quarter 2023 results on Feb 8, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 5.6%. It pulled off a trailing four-quarter earnings surprise of 5.6%, on average.
The Chicago, IL-based company is expected to have recorded year-over-year higher revenues on the back of growth in both segments — Products and Systems Integration and Services and Software. It benefits from the increasing demand for its mission-critical technologies in North America and globally.
Factors at Play
During the to-be-reported quarter, Motorola secured a contract from Lithuanian police to deploy the M500 in-car video system to augment the situational awareness and safety of their officials. The M500 in-car system, integrated with AI, incorporates industry-leading video technology with sharp sensors that enhance the clarity of vision, both during the day and night, as well as inside and outside of the vehicle. This is likely to have generated incremental revenues during the quarter.
In the quarter, Cologne Bonn Airport opted to upgrade its TETRA (terrestrial trunked radio) digital radio communication infrastructure, leveraging Motorola’s TETRA solution portfolio. Along with enhanced flexibility and security, this system provides greater scalability, capable of supporting a single site to a network spanning 5000 sites. The solution also comes with multi-layered cyber defense features that incorporate regular security updates, operating system patching, anti-virus and more.
During the quarter, New South Wales State Emergency Services opted to deploy Motorola’s SmartConnect to enhance mission-critical radio communications infrastructure. Engineered for excellent coverage and ensuring connectivity beyond the boundaries of a network, it allows safety workers' radio systems to utilize in-vehicle LTE or satellite modems for seamless remote access without interruptions. These are likely to be reflected in the upcoming quarterly results.
During the fourth quarter, Motorola augmented its mobile video portfolio with the launch of LTE-enabled V500 body-worn cameras for improved safety and security of frontline officers. With critical real-time field intelligence to emergency response backed by LTE connectivity, the cameras facilitate security personnel to respond quickly and efficiently to any adverse situation. In addition to live streaming facilities for enhanced situational awareness with 128GB storage capacity, it speeds up evidentiary workflows by enabling officers to tag footage from the camera and send it to the backend software immediately.
Riding on such state-of-the-art products, Motorola expects to record strong demand across video security and services, land mobile radio products and related software while benefiting from a solid foundation. These systems drive the demand for additional device sales and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations. These developments are expected to have positively impacted its performance in the quarter.
The Zacks Consensus Estimate for the Products and Systems Integration segment’s revenues is pegged at $1,835 million. The figure indicates a rise from $1,810 million recorded in the year-ago quarter. Our estimates for revenues from this segment stand at $1,816, implying 0.3% year-over-year growth. The Zacks Consensus Estimate for the Services and Software segment’s revenues is pegged at $980 million, up from $896 million recorded in the year-earlier quarter. Our estimate for revenues from this segment stands at $990, suggesting 10.5% year-over-year growth.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $2,814 million, which indicates growth from the year-ago quarter’s reported figure of $2,706 million. The consensus estimate for adjusted earnings per share stands at $3.63, which suggests an increase from $3.60, driven by top-line growth.
Earnings Whispers
Our proven model does not predict an earnings beat for Motorola in the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Motorola Solutions, Inc. Price and EPS Surprise
Motorola Solutions, Inc. price-eps-surprise | Motorola Solutions, Inc. Quote
Zacks Rank: Motorola carries a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
InterDigital, Inc. IDCC is set to release quarterly numbers on Feb 15. It has an Earnings ESP of +1.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NVIDIA Corporation NVDA is +3.68% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 21.
The Earnings ESP for Akamai Technologies, Inc. AKAM is +1.61% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 13.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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