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Motorola Solutions (MSI) Q1 Earnings: What's in the Cards?

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Motorola Solutions, Inc. (MSI - Free Report) is scheduled to report first-quarter 2017 results on May 4, after market close.

In the last quarter, the company posted a positive earnings surprise of 10%. The company has an impressive track record with respect to earnings. Motorola Solutions outpaced the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 16.44%.

The impressive earnings history is reflected in the company’s price performance over the last six months. During the period, Motorola Solutions returned 20.86%, while the Wireless Equipment industry advanced only 1.04%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

We are impressed by the company's strategy of growing through mergers and acquisitions. The company’s acquisition of Airwave Solutions completed last year isexpected to boost first-quarter 2017 revenues by about $115 million. In March, the company purchased Interexport, which will further drive revenues in the first quarter. We are impressed by Motorola’s efforts to reward its investors through dividend payments and buybacks.

The company expects revenues in the first quarter of 2017 to improve from 3% to 5% on a year-over-year basis. The company’s adjusted earnings per share in the first quarter are projected in the band of 52 cents to 57 cents.

However, we are concerned about the company's exposure to foreign exchange movements due to its global operations. The company is heavily dependent on government expenditures for its revenues as bulk of its total sale comes from government agencies.

Earnings Whispers

Despite the impressive earnings history and price performance, our quantitative model does not conclusively show that Motorola Solutions is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for the company is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 50 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Motorola Solutions has a Zacks Rank #2, which increases the predictive power of ESP. However, that alone is not sufficient to secure an earnings beat.

Conversely, we advise investors not to consider Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Motorola Solutions, Inc. Price and EPS Surprise

 

Motorola Solutions, Inc. Price and EPS Surprise | Motorola Solutions, Inc. Quote

Stocks to Consider

Investors interested inthe broader computer and technology sector may consider the following stocks. This is because our model shows that these companies possess the right combination of elements to post an earnings beat this quarter.

Airgain, Inc. (AIRG - Free Report) has an Earnings ESP of +200% and a Zacks Rank #3. The company will report first-quarter 2017 earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apptio Inc. has an Earnings ESP of +8.33% and a Zacks Rank #3. The company will report first-quarter 2017 earnings on May 4.

Harris Corporation has an Earnings ESP of +3.05% and a Zacks Rank #3. The company will report third-quarter fiscal 2017 earnings on May 3.

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