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

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Motorola Solutions, Inc. (MSI - Free Report) is scheduled to report first-quarter 2018 earnings results after the closing bell on May 3.

In the last reported quarter, the company delivered a positive earnings surprise of 3.4%. Notably, Motorola surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, with an average beat of 11.8%.

The company is likely to report higher consolidated revenues on a year-over-year basis supported by healthy growth dynamics.

Whether this could result into an earnings beat remains to be seen.

Factors to Consider

During the first quarter, Motorola completed the acquisition of Avigilon, bringing an advanced video surveillance and analytics to Motorola Solutions’ public safety, government and commercial customers.

The company announced three new solutions for enhanced mission-critical communications, including an app to share digital evidence. It plans to transform communications for first responders who use land-mobile radio and long-term evolution networks.

Motorola completed the acquisition of Plant Holdings, Inc., which holds the Airbus DS Communications business, from Airbus Defense and Space, Inc., an indirect subsidiary of Airbus SE. The acquisition strengthened Motorola Solutions’ command center software portfolio as well as its Software Enterprise.

These factors are likely to lend momentum to the company’s financial results. However, costs related to Motorola’s acquisition strategy are likely to hurt its bottom-line growth.

The Zacks Consensus Estimate for total revenues for the quarter is pegged at $1,371 million, up from $1,281 million reported in the year-earlier quarter. Adjusted earnings per share is expected to be 86 cents compared with 71 cents reported in the year-ago quarter.  

Our proven model does not conclusively show that Motorola is likely to beat earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:   

Zacks ESP: Motorola has an Earnings ESP of -0.45% as the Most Accurate estimate is pegged at 85 cents and the Zacks Consensus Estimate stands at 86 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.   
 

Zacks Rank: Motorola currently has a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.  

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Casa Systems, Inc. has an Earnings ESP of +6.48% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BlackBerry Limited (BB - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #1.    

Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +27.61% and a Zacks Rank #1.

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