Stock Analysis on Net
Stock Analysis on Net

Motorola Solutions Inc. (NYSE:MSI)

This company has been moved to the archive! The financial data has not been updated since August 1, 2024.

Dividend Discount Model (DDM)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.

Intrinsic Stock Value (Valuation Summary)

Motorola Solutions Inc., dividends per share (DPS) forecast

US$

Microsoft Excel
Year Value DPSt or Terminal value (TVt) Calculation Present value at 13.04%
0 DPS01 3.62
1 DPS1 17.40 = 3.62 × (1 + 380.70%) 15.39
2 DPS2 67.61 = 17.40 × (1 + 288.53%) 52.91
3 DPS3 200.37 = 67.61 × (1 + 196.36%) 138.72
4 DPS4 409.14 = 200.37 × (1 + 104.19%) 250.59
5 DPS5 458.32 = 409.14 × (1 + 12.02%) 248.34
5 Terminal value (TV5) 50,463.78 = 458.32 × (1 + 12.02%) ÷ (13.04% – 12.02%) 27,343.00
Intrinsic value of Motorola Solutions Inc. common stock (per share) $28,048.96
Current share price $398.58

Based on: 10-K (reporting date: 2023-12-31).

1 DPS0 = Sum of the last year dividends per share of Motorola Solutions Inc. common stock. See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.30%
Expected rate of return on market portfolio2 E(RM) 13.81%
Systematic risk of Motorola Solutions Inc. common stock βMSI 0.92
 
Required rate of return on Motorola Solutions Inc. common stock3 rMSI 13.04%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rMSI = RF + βMSI [E(RM) – RF]
= 4.30% + 0.92 [13.81% – 4.30%]
= 13.04%

Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Motorola Solutions Inc., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Dividends declared 604 544 494 449 395
Net earnings attributable to Motorola Solutions, Inc. 1,709 1,363 1,245 949 868
Net sales 9,978 9,112 8,171 7,414 7,887
Total assets 13,336 12,814 12,189 10,876 10,642
Total Motorola Solutions, Inc. stockholders’ equity (deficit) 724 116 (40) (558) (700)
Financial Ratios
Retention rate1 0.65 0.60 0.60 0.53 0.54
Profit margin2 17.13% 14.96% 15.24% 12.80% 11.01%
Asset turnover3 0.75 0.71 0.67 0.68 0.74
Financial leverage4 18.42 110.47 — — —
Averages
Retention rate 0.58
Profit margin 14.23%
Asset turnover 0.71
Financial leverage 64.44
 
Dividend growth rate (g)5 380.70%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net earnings attributable to Motorola Solutions, Inc. – Dividends declared) ÷ Net earnings attributable to Motorola Solutions, Inc.
= (1,709 – 604) ÷ 1,709
= 0.65

2 Profit margin = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Net sales
= 100 × 1,709 ÷ 9,978
= 17.13%

3 Asset turnover = Net sales ÷ Total assets
= 9,978 ÷ 13,336
= 0.75

4 Financial leverage = Total assets ÷ Total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 13,336 ÷ 724
= 18.42

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.58 × 14.23% × 0.71 × 64.44
= 380.70%

Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × r – D0) ÷ (P0 + D0)
= 100 × ($398.58 × 13.04% – $3.62) ÷ ($398.58 + $3.62)
= 12.02%

where:
P0 = current price of share of Motorola Solutions Inc. common stock
D0 = the last year dividends per share of Motorola Solutions Inc. common stock
r = required rate of return on Motorola Solutions Inc. common stock

Dividend growth rate (g) forecast

Motorola Solutions Inc., H-model

Microsoft Excel
Year Value gt
1 g1 380.70%
2 g2 288.53%
3 g3 196.36%
4 g4 104.19%
5 and thereafter g5 12.02%

where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 380.70% + (12.02% – 380.70%) × (2 – 1) ÷ (5 – 1)
= 288.53%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 380.70% + (12.02% – 380.70%) × (3 – 1) ÷ (5 – 1)
= 196.36%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 380.70% + (12.02% – 380.70%) × (4 – 1) ÷ (5 – 1)
= 104.19%