A Fresh Look at Motorola Solutions (MSI) Valuation After Record Q2 Results and Upgraded Outlook

Motorola Solutions (NYSE:MSI) delivered plenty for investors to consider in its recent quarterly update. The company posted record-breaking revenue and earnings for the second quarter, with a standout 15% growth in its software and services segment. Alongside these results, management raised its projections for full-year sales, earnings per share, and operating cash flow. This move signals confidence in execution and future momentum, based on a steady stream of new products and acquisitions. This upbeat report did not go unnoticed in the market. Over the past month, the stock is up 8%, with a 13% gain over the past three months and nearly 9% in the past year. That trend has been building for a while: over the last five years, Motorola Solutions has delivered a cumulative return that is hard to ignore, even after accounting for everyday volatility and recent insider selling activity. With the stock’s price climbing on positive results and management guidance, the real question now is whether there is further upside left for new investors, or if the market already factors in all the expected growth ahead.

Most Popular Narrative: 6.1% Undervalued

According to community narrative, analysts currently view Motorola Solutions as undervalued by just over 6% based on its future earnings potential and sector dynamics.

The accelerating focus on public safety and security, fueled by heightened geopolitical instability, border security needs, and new government funding programs such as the "One Big Beautiful Bill", is driving strong, sustained customer demand for advanced, integrated communication solutions. This expanding long-term tailwind is evident in Motorola's record Q2 orders, growing backlog, and consistent multi-year contract wins, which support above-trend revenue growth and durability.

Wondering why this valuation is drawing attention? Here’s a hint: the community narrative centers on a profit trajectory that is rarely seen in the sector, supported by above-trend growth assumptions and bold margin forecasts. Interested in which numbers underpin this optimistic price target or what would need to happen for these projections to become reality? Explore the remarkable financial blueprint at the heart of this valuation story.

Result: Fair Value of $500.63 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still potential obstacles, such as slower adoption of new software solutions or increased competition, that could disrupt Motorola Solutions' projected growth story.

Find out about the key risks to this Motorola Solutions narrative.

Another View: What Does Our DCF Model Indicate?

Taking a different perspective, the SWS DCF model suggests a less optimistic picture compared to the market-based narrative. This analysis indicates that Motorola Solutions may actually be overvalued at current levels. Which approach will prove more accurate in the long run?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Motorola Solutions for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Motorola Solutions Narrative

If you have a different take or want to dig into the numbers on your own, the tools are here to help shape your own perspective in just minutes. Do it your way.

A great starting point for your Motorola Solutions research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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