MOTOROLA SOLUTIONS, INC. (MSI): what the price assumes
In the published model solve dated 2026-Q2, anchored at $486.00, MOTOROLA SOLUTIONS, INC. (MSI) is priced for +21.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-30 · Source: https://boothcheck.com/report/MSI
Headline
| Field | Value |
|---|---|
| Ticker | MSI |
| Company | MOTOROLA SOLUTIONS, INC. |
| Current price | $486.00/sh |
| Composition | Mission Critical Networks (MCN) 74% / Video 18% / Command Center 8% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 12.2% |
| Operating margin today | 24.9% |
| Margin compression (value-band) | -12.7pp |
| Implied growth | 21.1% |
| Multiple paid | 29x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.3% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.59σ |
| cohort percentile (of 188 peers) | 50 |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
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 | 2.79x | 4 | expensive |
| Earnings | 4.20x | 5 | expensive |
| Relative | 5.43x | 2 | expensive |
| Growth | 1.00x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
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=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $483.06 | 1.01x | yes | FCF base $2.9B, growth 10% (input: historical growth), terminal g 4.0%, WACC 8.4%, 6yr projection |
| DCF Exit Multiple | Growth | $609.22 | 0.80x | yes | Exit EV/EBITDA: 23.2x / 25.2x / 27.2x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | — | — | no | P/E 28x (static sector reference · 2026-04), scenarios: 23.2x / 28.0x / 32.8x (bear / base = reference held flat / bull), EV/EBITDA 20x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $139.40 | 3.49x | yes | BV/sh $16.15, ROE (TTM) 79.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $689.37 | 0.70x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $486.25 | 1.00x | yes | Rev $12.2B, growth 10% (input: historical growth; tapered), Terminal P/S: 5.4x / 6.6x / 7.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $152.28 | 3.19x | yes | EPS $12.69, growth 1% (input: historical EPS growth), PEG=31.64 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $91.00 | 5.34x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.47B × (1−25%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $232.93 | 2.09x | yes | BV $16.15 + 5yr PV of (ROE (TTM) 79.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $67.90 | 7.16x | yes | √(22.5 × EPS $12.69 × BVPS $16.15) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $3.54B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $121.04 | 4.02x | yes | FCF $2677.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $97.72 | 4.97x | yes | SBC-adj FCF $2.32B (FCF $2.68B − SBC $0.36B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $115.74 | 4.20x | yes | EPS $12.69 × (8.5 + 2×1.2%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $10.15 | 47.88x | yes | BV $16.15 × (ROIC 5.3% / WACC 8.4%) (excluded from median) |
| P/Sales Sector | Relative | — | — | no | Revenue $12.24B × sector P/S 6.0x |
| PEG Fair Value | Relative | $63.45 | 7.66x | yes | EPS $12.69 × (PEG 1.5 × growth 1.2% (input: historical EPS growth)) → PE 1.8x |
| Earnings Yield | Earnings | $137.19 | 3.54x | yes | EPS $12.69 / 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 | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Products and Systems Integration | operating | enterprise | $7.3b | $1.8b operating-income | withheld | unresolved no unit value |
| Software and Services | operating | enterprise | $4.4b | $1.2b operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $8.3b |
| Net debt / NOPAT (after-tax) | 3.63x |
| Net debt / operating income (pre-tax) | 2.73x |
| Interest coverage | 6.9x |
| Share count CAGR (buyback) | -0.5% |
| 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)
- FY2025 10-K: …and SICK. Mobile Computing : Competitors in mobile computing and related services include companies that have historically served enterprises with ruggedized devices. For some applications, we compete with companies that provide tablets and smart phones. Competitors include: Datalogic, Honeywell, Panasonic and Urovo.…
- FY2025 10-K: …and collaboration-based offerings, demand-sensing, price optimization, and prescriptive analytics. These offerings are typically delivered through cloud-based software subscriptions and leverage big data, artificial intelligence, and mobile and web applications to provide customers with real-time visibility and…
- UI (UBIQUITI INC.)
- FY2025 10-K: …management of the solutions; and • our ability to provide product support. New entrants seeking to gain market share by introducing new technology and new products may also make it more difficult for us to sell our products, and could create increased pricing pressure. In addition, broadband equipment providers or…
- FY2025 10-K: …a new product is not successful, or if we are not able to achieve the revenues or margins that we expect, our results of operations may be harmed and we may not recover our product development and marketing expenditures. We may also be required to add a traditional direct sales force and customer support personnel to…
- CIEN (Ciena Corp)
- FY2025 10-K: …® software enable network operators to automate lifecycle management, orchestrate across multi-vendor environments, and evolve toward service-ready networks. We also seek to increase the overall proportion of our revenue derived from software by aligning opportunities and facilitating collaboration across our sales…
- FY2025 10-K: …that provide end-to-end support for network hardware and software, and managed services to coordinate network infrastructure operations. Product Development To remain competitive, we continually invest in our solutions offerings to address new market opportunities, add new features and functionality, and ensure…
- DGII (DIGI INTERNATIONAL INC.)
- FY2025 10-K: …as well as off-the-shelf gateways, modems and adapters. They are used by customers across a broad range of industries. These products offer a wide selection of both standards-based and proprietary wireless protocols including Zigbee, Cellular, Sub-1 GHz, LPWA, WiFi and Bluetooth to meet diverse application…
- FY2025 10-K: …or new products that respond to technological change, evolving industry standards or regulations and changing customer requirements. There can be no assurance that we will not experience difficulties that could delay or prevent the successful development, introduction, and marketing of these products or product…
Software and Services (reported)
- TYL (TYLER TECHNOLOGIES, INC.)
- FY2025 10-K: …software. We recognize the revenue allocable to "off-the-shelf" software licenses and specified upgrades at a point in time when control of the software license transfers to the client, unless the software is not considered distinct. For arrangements that involve significant production, modification or customization…
- FY2025 10-K: …features and functionality, along with updates necessary because of legislative or regulatory changes. Nearly all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our…
- NICE (NICE LTD.)
- FY2025 20-F: …network connectivity and services fees for deployment of certain cloud platforms. Revenue from subscription services is recognized when control is transferred to the customer, occurring either evenly over the contract period as services have a consistent continuous pattern of transfer to the F-23 NICE LTD. AND ITS…
- FY2025 20-F: …capabilities that deliver trusted enterprise software across all our markets, including FedRAMP authorization to the relevant business lines, with more than 30 authorized applications, native PCI, supported by one of the most advanced SOCs in the industry • Our flexible delivery model that allows our customers to…
- PANW (Palo Alto Networks Inc)
- FY2025 10-K: Advanced URL Filtering, Advanced DNS Security, IoT/OT Security, GlobalProtect ® , Prisma Access Agent, Enterprise Data Loss Prevention ("Enterprise DLP"), AI for IT Operations ("AIOps"), Software as a Service ("SaaS") Security, and AI Access Security. Through these add-on services, our customers are able to secure…
- FY2025 10-K: …and services help secure enterprise users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by artificial intelligence ("AI") and automation. A key element of our strategy is to help our customers simplify their security architectures through consolidating disparate point products. We…
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.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- 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