Motorola Solutions, Inc. (MSI - Free Report) recently acquired VaaS International Holdings, Inc., a data and image analytics firm, for $445 million in a combination of cash and equity. The transaction will expand Motorola’s footprint in the command center software portfolio with the largest shareable database of vehicle location information.
With dual headquarters in Livermore, CA and Fort Worth, TX, this video analytics service provider leverages machine learning and artificial intelligence to analyze data for vehicle location. VaaS (“Video analysis as a Service”) utilizes fixed and mobile license plate reader cameras to capture and analyze license plate information across the globe. These cameras are highly proficient in capturing images, even when vehicles are moving at high speeds or in low-visibility weather conditions. The analyzed data feed is then shared across multiple law enforcement agencies to quickly apprehend suspects and find missing persons, thereby accelerating response time and improving outcomes.
The acquired firm, with projected revenues of approximately $100 million in 2019, will form an integral part of Motorola’s Services and Software segment. Over the years, Motorola has expanded its services installed base and is building an end-to-end public safety command center platform. Management expects this segment to grow at a faster rate than the other segment and drive meaningful operating margin expansion in 2019 and beyond. The company’s Services and Software primarily comprises recurring revenues, including Managed & Support Services, public safety and enterprise command center software, video software and unified communications applications.
In addition to inorganic growth, Motorola has augmented its public safety portfolio by collaborating with other players in the ecosystem. As the public safety market continues to embrace software offerings to enhance workflows, Motorola is able to sell cloud-first SaaS offerings as well as on-premise solutions with ancillary implementation and managed services. In an effort to further expand its public safety measures, the company has launched new broadband service, high power mobile radio and mobile app solutions, dedicated to public security. Motorola’s competitive position along with attractive portfolio for large addressable markets and healthy balance sheet augur well for future growth.
The company has recorded an average return of 25.1% in the past year, while the industry has declined 5.9%.
Motorola presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Ubiquiti Networks, Inc. (UBNT - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Comtech Telecommunications Corp. (CMTL - Free Report) and Ericsson (ERIC - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ubiquiti has long-term earnings growth expectation of 14%. It surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 11.3%.
Comtech has a long-term earnings growth expectation of 5%. It beat earnings estimates in each of the trailing four quarters, the average surprise being a stellar 252.3%.
Ericsson is currently trading at a forward P/E (F1) of 21.1x.
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