Motorola Solutions Third Quarter Earnings Preview

Shares of Motorola Solutions (NYSE:MSI) have risen 10.6% since July 23, 2012 to close at $50.76 on October 18, 2012. The company is looking to keep that trend going when it releases its third quarter results on Wednesday, October 24, 2012.



Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Earnings: Quality Means Everything

What to Expect: The consensus estimate for Motorola's earnings is 61 cents per share, up 8.9% from a year ago when the company reported earnings of 56 cents per share.

The consensus estimate hasn't changed in the last month, but it has dropped from 69 cents three months ago. For the fiscal year, analysts are projecting earnings of $2.64 per share.

Motorola is expected to beat last year's reported revenue of $2.1 billion and come in at $2.15 billion for the quarter. For the fiscal year, expected revenue is $8.68 billion.



Company Performance: Revenue has declined 27.3% on average over the last four quarters. The sharpest fall was a drop of 60.6% from the year-earlier quarter in the fourth quarter of the last fiscal year.

Compared to the industry average of 7.47, MSI's P/E ratio of 24.8 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Find P/E And PEG Ratios



Motorola's stock price is currently on the rise. Since October 10, 2012 business days the stock has risen 81 cents per share.





The Competition: Motorola Solutions provides technologies, products, and services, including wireless handsets, digital entertainment devices, wireless accessories, set-top boxes, and video distribution systems. Most analysts (seven of 14) give Motorola a hold rating. They have grown pessimistic about the stock, as the number of buy ratings has dropped slightly over the past three months.

The company's closest competitor in the communications equipment industry is Cisco (CSCO). Analysts are more optimistic about Motorola than about Cisco. Only 19 out of 32 analysts rate the latter a buy compared to six of 14 for the former.