MSI 397.91 (+0.44%)
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Last update on 2024-06-06

Motorola Solutions (MSI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Motorola Solutions (MSI) achieves high Piotroski F-Score of 8/9 in 2023, signaling strong financial position. Detailed analysis of profitability, liquidity, and efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 8

We're running Motorola Solutions (MSI) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Motorola Solutions (MSI) has been evaluated using the Piotroski F-Score model, which assesses profitability, liquidity, and operating efficiency based on 9 criteria. Motorola scored 8 out of 9 points, indicating a strong financial position. Key highlights include positive net income, robust cash flow from operations, increasing return on assets (ROA), and an improving gross margin and asset turnover ratio. However, a slight decrease in the current ratio, which measures the ability to pay short-term liabilities, was noted. Historical data shows fluctuating performances in these metrics, but recent trends suggest notable improvements.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Motorola Solutions (MSI) appears to be a strong and undervalued investment with a high Piotroski score of 8, showcasing good financial health. It is definitely worth considering for investors, although it's essential to be cautious about the decreasing current ratio, which might suggest liquidity issues. Overall, the solid profitability, efficient operations, and share buyback program make MSI an attractive proposition.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Motorola Solutions (MSI)

Company has a positive net income?

Net income shows a company's profitability over a period. Positive net income indicates financial health, while negative suggests issues.

Historical Net Income of Motorola Solutions (MSI)

Motorola Solutions (MSI) posted a net income of $1.709 billion in 2023, which is positive. Over the past 20 years, MSI's net income has seen fluctuations, with occasional losses such as -$4.244 billion in 2008 and -$155 million in 2017. However, the recent trend from 2018 onwards has been consistently positive, marking a sign of improved financial stability. Despite earlier volatility, the current positive net income earns MSI 1 point in the Piotroski analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a key financial metric that indicates the amount of cash a company generates from its normal business operations.

Historical Operating Cash Flow of Motorola Solutions (MSI)

For 2023, Motorola Solutions' CFO stands at $2,044,000,000, which is positive. This grants Motorola Solutions 1 point for this criterion. Observing the yearly CFO values over the last two decades, the company has demonstrated consistent strength in generating operating cash flow. While there were lower values and even a negative in 2014, the overall trend remains robust and increasingly positive, highlighting Motorola's solid operational efficiency and financial health. This positive trend is a crucial indicator of the firm's ability to sustain operations, service debt, and potentially reward shareholders, making it a favorable signal for investors.

Return on Assets (ROA) are growing?

Change in ROA evaluates the improvement or deterioration in the company’s ability to generate earnings from asset deployment, a crucial indicator for defining managerial effectiveness.

Historical change in Return on Assets (ROA) of Motorola Solutions (MSI)

The Return on Assets (ROA) for Motorola Solutions (MSI) increased from 0.109 in 2022 to 0.1307 in 2023, earning a point in the Piotroski Analysis. This uptick is positive, indicating increased efficiency in using its assets to generate earnings. Over the past 20 years, MSI has had fluctuations in its ROA but currently shows a significant improvement from historical lows seen a decade ago. Comparatively, MSI’s ROA still falls below the industry median of 0.3903 in 2023, suggesting it lags behind its peers in efficiency but is on a path of improvement.

Operating Cashflow are higher than Netincome?

The criterion compares Operating Cash Flow to Net Income to assess earnings quality. High-quality earnings are reflected when Operating Cash Flow exceeds Net Income.

Historical accruals of Motorola Solutions (MSI)

In 2023, Motorola Solutions (MSI) reported an Operating Cash Flow (OCF) of $2,044,000,000 compared to a Net Income of $1,709,000,000. Since OCF is higher than Net Income, MSI earns 1 point based on this criterion. This higher OCF signifies robust cash generation, suggesting that earnings are backed by strong, tangible cash flows. Historically, analyzing the data from the past 20 years, we observe a pattern of inconsistent performance, including years where OCF was negative (e.g., -$590M in 2014). However, since 2017, both OCF and Net Income show a healthier, upward trend, highlighting improved operational efficiency. In the broader context, strong OCF relative to Net Income indicates quality earnings and potentially reliable growth, making MSI an attractive proposition from a fundamental analysis standpoint.

Liquidity of Motorola Solutions (MSI)

Leverage is declining?

Leverage evaluates the amount of debt a company uses to finance its assets, indicating financial risk.

Historical leverage of Motorola Solutions (MSI)

In 2022, Motorola Solutions (MSI) had a leverage ratio of 0.502, which decreased to 0.3833 in 2023, signifying a reduction in the company's debt burden relative to its equity. This positive trend is bolstered by examining historical data showing fluctuations but with recent reduction from higher leverage rates in previous years. A decreased leverage ratio generally represents reduced financial risk and a strengthened balance sheet, thus yielding a score of 1 for this criterion.

Current Ratio is growing?

Compare the Current Ratio of 0.9981 in 2023 with the Current Ratio of 1.1524 in 2022 to see if it increased or decreased.

Historical Current Ratio of Motorola Solutions (MSI)

The current ratio for Motorola Solutions (MSI) has decreased from 1.1524 in 2022 to 0.9981 in 2023. This indicates that the company's liquidity position has weakened slightly over the past year. A lower current ratio suggests that MSI may have less ability to cover its short-term liabilities with its short-term assets. Over the past 20 years, MSI's current ratio has typically been above 1, often outperforming the industry median. However, the recent trend is concerning as it falls below the industry median of 1.8276 in 2023. As a company's ability to pay off its short-term liabilities is crucial, this decrease results in a score of 0 in the Piotroski analysis for this specific criterion.

Number of shares not diluted?

This criterion examines the change in shares outstanding year-over-year. A decrease in outstanding shares typically signals share buybacks, often a sign of management's confidence in the company's prospects.

Historical outstanding shares of Motorola Solutions (MSI)

Comparing the outstanding shares of 2022 (167,500,000) with those of 2023 (167,000,000), we observe a decrease in outstanding shares. This translates to a 0.3% reduction year-over-year. Historically, the outstanding shares have generally been decreasing over the past two decades, particularly from 2010 onward. This trend is indicative of strong share buyback programs, which are usually perceived positively by investors as it reduces the number of shares available and can boost the share price. Consequently, this criterion is met positively, adding 1 point to the Piotroski score. This lower share count indicates management’s commitment to enhancing shareholder value, reinforcing a favorable outlook for Motorola Solutions (MSI).

Operating of Motorola Solutions (MSI)

Cross Margin is growing?

The Gross Margin evaluates what portion of revenue exceeds the company's cost of goods sold, indicating financial health.

Historical gross margin of Motorola Solutions (MSI)

In 2023, Motorola Solutions (MSI) reported a Gross Margin of 0.4981 compared to 0.4641 in 2022, signifying an increase. This positive trend earns the company 1 point according to the Piotroski criteria. Historically, Motorola's Gross Margin has reflected a positive trajectory, outperforming the industry median in several years. For instance, their Gross Margin has consistently surpassed the industry median from 2011 to 2023. Consequently, the upward trend in Gross Margin from 2022 to 2023 is a favorable indicator, underscoring robust profitability and potentially effective cost management strategies.

Asset Turnover Ratio is growing?

This criterion evaluates the change in a company's efficiency in using assets to generate sales revenue. An increase indicates better performance.

Historical asset turnover ratio of Motorola Solutions (MSI)

The Asset Turnover ratio for Motorola Solutions (MSI) increased from 0.7289 in 2022 to 0.7631 in 2023. This shows an improvement in the company's efficiency in generating revenue from its assets. Over the last 20 years, the Asset Turnover ratio has fluctuated, with a high of 1.1551 in 2006 and a low of 0.4153 in 2011. The recent trend is positive, marking increased operational efficiency. Hence, 1 point is added.


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