MOTOROLA SOLUTIONS, INC. (MSI): what the price requires
At today's price, MOTOROLA SOLUTIONS, INC. (MSI) is priced for +21.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MSI
Headline
| Field | Value |
|---|---|
| Ticker | MSI |
| Company | MOTOROLA SOLUTIONS, INC. |
| Current price | $417.61/sh |
| Composition | Products and Systems Integration 62% / Software and Services 38% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 11.6% |
| Operating margin today | 23.3% |
| Margin compression implied | -11.7pp |
| Implied growth | 21.7% |
| Multiple paid | 30x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.5pp.
Reconcile: at the x-ray's 9.3% required return this reads ~6.1 years; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.62σ |
| cohort percentile (of 177 peers) | 53 |
| sustained it ~5 years at this level | 40% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.48x | 4 | expensive |
| Earnings | 3.86x | 5 | expensive |
| Relative | 1.18x | 5 | expensive |
| Growth | 1.01x | 3 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $412.83 | 1.01x | yes | FCF base $2.6B, growth 8% (input: historical growth), terminal g 4.0%, WACC 8.3%, 6yr projection |
| DCF Exit Multiple | Growth | $504.19 | 0.83x | yes | Exit EV/EBITDA: 21.1x / 23.1x / 25.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $365.99 | 1.14x | yes | P/E 28x (static sector reference · 2026-04), scenarios: 23.4x / 28.0x / 32.6x (bear / base = reference held flat / bull), EV/EBITDA 20x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $134.49 | 3.11x | yes | BV/sh $15.14, ROE (TTM) 82.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $692.26 | 0.60x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $404.29 | 1.03x | yes | Rev $11.9B, growth 8% (input: historical growth; tapered), Terminal P/S: 4.9x / 5.9x / 6.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $148.80 | 2.81x | yes | EPS $12.40, growth 3% (input: historical EPS growth), PEG=11.05 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $105.66 | 3.95x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.38B × (1−17%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $225.05 | 1.86x | yes | BV $15.14 + 5yr PV of (ROE (TTM) 82.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $65.00 | 6.42x | yes | √(22.5 × EPS $12.40 × BVPS $15.14) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $355.10 | 1.18x | yes | EBITDA $3.42B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $108.30 | 3.86x | yes | FCF $2488.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $87.26 | 4.79x | yes | SBC-adj FCF $2.16B (FCF $2.49B − SBC $0.33B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $151.46 | 2.76x | yes | EPS $12.40 × (8.5 + 2×3.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $7.15 | 58.41x | yes | BV $15.14 × (ROIC 3.9% / WACC 8.3%) (excluded from median) |
| P/Sales Sector | Relative | $423.86 | 0.99x | yes | Revenue $11.87B × sector P/S 6.0x |
| PEG Fair Value | Relative | $62.00 | 6.74x | yes | EPS $12.40 × (PEG 1.5 × growth 3.0% (input: historical EPS growth)) → PE 4.6x |
| Earnings Yield | Earnings | $134.05 | 3.12x | yes | EPS $12.40 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $8.1b |
| Net debt / NOPAT (after-tax) | 3.77x |
| Net debt / operating income (pre-tax) | 3.14x |
| Interest coverage | 7.3x |
| Share count CAGR (buyback) | -0.7% |
| Burning cash | no |
Bullet Takeaways
- Motorola Solutions has rebuilt itself around recurring public-safety software and services, the higher-margin segment that grew 18% last quarter while the radios-and-hardware side grew 1%.
- The biggest risk is the price: at roughly 29x operating income it embeds about 20.5% annual operating-income growth for five years, a pace the company can hit near-term but must sustain far longer than most fast-growers manage.
- Watch the order book, which set an all-time-high backlog of $15.7 billion last quarter on orders up 38%, the clearest forward read on whether the growth the price assumes actually arrives.
Bull Case
Look at where the price sits against the methods and the bull thesis comes into focus. Group the valuation approaches into families and the price clears the peer-multiple and forward-growth lenses while the asset-value and earnings-power lenses read it as expensive. That is the signature of a business the market expects to keep compounding, and Motorola Solutions has the order book to back it. The company posted a record backlog of $15.7 billion last quarter, up 11% year over year, on orders that surged 38%. Backlog is contracted demand waiting to be recognized, and a record one in a business that sells to governments is about as durable a revenue signal as exists.
The mix shift is the real engine. Software and services revenue grew 18% last quarter while products and systems integration grew 1%, and the higher-growth half is also the stickier, higher-margin one. The 10-K describes a Command Center portfolio of "cloud-native, on-premises and hybrid software solutions that support the entire public safety" workflow, and video has become a genuine growth vector inside both segments: the filing notes video technology represented 21% of the software-and-services segment's net sales and 16% of the products-and-systems-integration segment's in 2025. Public-safety customers are migrating from one-time hardware purchases toward multi-year software subscriptions, and Motorola sits at the center of that transition with the installed base to sell into.
The demand backdrop is structural rather than cyclical. The 10-K frames the thesis directly: government and public-safety customers are "increasingly turning to video security technologies to increase visibility, accountability and safety for communities and first responders". This is spending that holds up across economic cycles because it is funded by public budgets tied to safety mandates, not discretionary consumer demand. Returns on capital are exceptional, with a trailing return on equity above 80%, and free cash flow of roughly $2.5 billion funds both the dividend and a steady stream of tuck-in acquisitions that extend the software portfolio. The bull case is that a recurring-revenue public-safety platform with a record backlog grows into the premium the market is already paying.
Bear Case
The bear case starts with the competitive ground shifting under the legacy business. Motorola's historic moat is land-mobile radio, the mission-critical communications networks that public-safety agencies have run for decades. That business now grows at low single digits, just 1% last quarter, and the question is whether the technology itself is being slowly disrupted. Broadband push-to-talk over commercial cellular networks, body-camera and cloud-video entrants, and command-center software rivals are all attacking pieces of the stack Motorola once owned end to end. The company is responding through acquisitions, having bought Exacom and Hyper for a combined $90 million and agreed to acquire Bell Canada's land-mobile-radio services business, but acquiring growth is more expensive and less certain than owning it organically.
The supply chain and customer base add structural fragility. The 10-K warns that future supply-chain effects "could also impact our ability to meet customer demand and negatively impact our results of operations", a real concern for a hardware-heavy segment still working through a record backlog. The customer concentration cuts both ways: selling to governments means stable, budget-backed demand, but it also means long procurement cycles, political budget risk, and exposure to public-sector spending priorities that can shift. A backlog is only as good as the budgets that fund it.
Then there is the price. At roughly 29x operating income, the market is paying for about 20.5% annual operating-income growth sustained for five years. The company's recent pace can reach that rate, but the stretch is in the duration: only about 42% of comparable fast-growers have historically sustained such growth even five years. The conservative valuation lenses make the demand concrete. The earnings-power method, which values the business on normalized profit with no growth, lands near $107, and the asset-value methods cluster well below the price too. Only the peer-multiple and forward-growth families reach $395 (June 27, 2026), and the growth-DCF gets there by holding today's roughly 22x exit EBITDA multiple flat. Net debt of about $8.1 billion, with interest covered 7.3 times, is manageable but not trivial for a company leaning on acquisitions to feed the growth the price requires. If the order momentum slows or the software mix shift stalls, the multiple has a long way to compress.
Valuation
At $395, the price is betting on durable, sustained growth from a public-safety franchise. Inverted, the current price embeds roughly 20.5% company-wide operating-income growth a year for five years. The useful nuance is in how that bet is unusual: the rate itself is within what Motorola has recently delivered, so the stretch is not the pace but the persistence. Only about 42% of comparable fast-growers have sustained that kind of growth for five years, which puts the embedded assumption at the demanding end of within-range rather than outright extreme.
The methods disagree along a clean line, and the line tells the story. The asset-value family sits well below the price, dragged down by a thin book value against an extraordinarily high return on equity, with Simple Excess Return near $134. The earnings-power family sits lower still, with Earnings Power Value around $107 on five-year-average operating income capitalized at the cost of capital, and FCF Yield near $108 on a zero-growth perpetuity. What reaches the price is the peer-multiple family, where EV/EBITDA Relative lands near $355 at a 20x sector multiple and the relative P/E method lands near $366, and the forward-growth family, where the cash-flow methods reach $418 to $483 by carrying today's exit multiple flat. The pattern is a business the static lenses call expensive and the forward lenses call fair, which is exactly what a high-quality compounder priced for continued execution looks like.
The peer comparison is looser than the multiple alone suggests. The communication-equipment cohort spans Qualcomm, NAPCO, and others, but none is a clean comp for a public-safety software-and-radio platform selling to governments, so the sector multiple is a rough anchor. The build of the business is the better lens: the software-and-services segment, growing 18% with video at 21% of its sales per the 10-K, deserves a richer multiple than the slow-growing hardware segment, and the blended price reflects that weighting. Solvency is a real input here, not an afterthought: net debt of about $8.1 billion with interest covered 7.3 times leaves room for the acquisition cadence the growth strategy depends on, but it is leverage the conservative methods do not ignore. The decisive question is duration, whether a record backlog and a recurring-software mix can hold the growth rate long enough to earn the multiple.
Catalysts
The most recent quarter was a strong one and reset guidance higher. For Q1 2026, reported May 7, Motorola Solutions posted revenue of $2.7 billion, up 7%, with software and services up 18% and products and systems integration up 1%. The headline was the order book: orders surged 38% in the quarter, driving an all-time-high ending backlog of $15.7 billion, up 11% year over year. The company raised full-year guidance, now expecting revenue of approximately $12.8 billion. For a business that recognizes revenue from a contracted backlog over time, a record order quarter is the most direct forward signal available.
The acquisition cadence continued and tilted toward software and AI. Motorola acquired Exacom and Hyper for a combined $90 million net of cash, closed two AI-focused deals to expand the Command Center and public-safety software portfolio, and signed a definitive agreement to acquire Bell Canada's land-mobile-radio services business. These are the tuck-ins that extend the recurring-software franchise and feed the growth the valuation assumes.
The combination of a record backlog, accelerating software revenue, and raised guidance has kept sentiment constructive. The next quarterly print is the test of whether the order momentum carries through to recognized revenue and whether the software mix shift continues to outpace the hardware base. That mix, more than any single quarter's top-line figure, is what determines how the durability bet embedded in the price plays out.
Peer Cohorts (Per Segment, With Filing Citations)
Products and Systems Integration (reported)
- ZBRA (ZEBRA TECHNOLOGIES CORPORATION)
- (no filing in the citation store)
- UI (UBIQUITI INC.)
- (no filing in the citation store)
- CIEN (Ciena Corp)
- (no filing in the citation store)
- DGII (DIGI INTERNATIONAL INC.)
- (no filing in the citation store)
Software and Services (reported)
- TYL (TYLER TECHNOLOGIES, INC.)
- (no filing in the citation store)
- NICE (NICE LTD.)
- (no filing in the citation store)
- PANW (Palo Alto Networks Inc)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Motorola Solutions Q1 2026 results, May 7, 2026 · MSI FY2025 10-K