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Can Healthy Revenue Growth Aid Motorola's (MSI) Q3 Earnings?

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Motorola Solutions, Inc. (MSI - Free Report) is scheduled to report third-quarter 2022 results on Nov 3, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 10.7%. It pulled off a trailing four-quarter earnings surprise of 8.2%, on average.

The Chicago, IL-based company is expected to have recorded year-over-year higher revenues on the back of growth in both segments — Products and Systems Integration, and Services and Software. It benefits from the increasing demand for its mission-critical technologies in North America and globally.

Factors at Play

During the quarter, Motorola inked a contract with Parana Public Safety Secretariat to augment the public-safety communications system in Parana, Brazil. The contract will upgrade the legacy communications network of the Latin American country’s police agencies and help them to better coordinate for mission-critical applications. Per the deal, Motorola will enable advanced digitally encrypted radio communications based on the P25 standard for a secure and resilient private communications system to support public safety.

In the third quarter, Motorola signed a deal with the Romanian National Administration of Penitentiaries for 2100 body-worn cameras for use across all the prisons in the country. Its state-of-the-art VB400 body-worn cameras enable the capture of incidents from the start as it offers an automated pre-recording feature. The VideoManager evidence management solution enables a highly advanced solution for protecting the evidence present on video. It also proves useful to officers’ daily workflow.

Riding on such state-of-the-art products, Motorola expects to record strong demand across video security and services, land mobile radio products and related software while benefiting from a solid foundation. These systems drive the demand for additional device sales and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations. These developments are expected to have positively impacted its performance in the quarter.

The Zacks Consensus Estimate for the Products and Systems Integration segment’s revenues is pegged at $1,427 million. The figure indicates a rise from $1,325 million recorded in the year-ago quarter.

During the quarter, Motorola inked a five-year contract extension worth $41.9 million with the New South Wales Telecommunications Authority to enhance the development of its Public Safety Network. MSI’s suite of public safety services, which encompass network lifecycle upgrades alongside 24x7 cybersecurity features, will offer secure and seamless performance for mission-critical applications. This is likely to be reflected in the upcoming results. The consensus estimate for Services and Software revenues is $871 million, which indicates growth from the year-ago figure of $782 million.

For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $2,313 million, which indicates growth from the year-ago quarter’s reported figure of $2,107 million. The consensus estimate for adjusted earnings per share is pegged at $2.88, which suggests an increase from $2.35 recorded in the prior-year quarter driven by top-line growth.

Earnings Whispers

Our proven model does not predict an earnings beat for Motorola in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.88. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. price-eps-surprise | Motorola Solutions, Inc. Quote

Zacks Rank: Motorola carries a Zacks Rank #3.

Stocks to Consider

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

Unity Software Inc. (U - Free Report) is set to release quarterly numbers on Nov 9. It has an Earnings ESP of +18.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for United States Cellular Corporation (USM - Free Report) is +47.46% and it sports a Zacks Rank of 1. The company is set to report quarterly numbers on Nov 3.

The Earnings ESP for CDW Corporation (CDW - Free Report) is +0.31% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 2.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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