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What's in Store for Motorola Solutions (MSI) in Q2 Earnings?

Motorola Solutions, Inc.MSI is scheduled to report second-quarter 2017 results on Aug 3, after the market closes.

In fact, the company delivered a positive earnings surprise of 28% in the previous quarter. It has also outpaced the Zacks Consensus Estimate in the last four quarters with an average beat of 16.62%.

Notably, Motorola Solutions has an impressive track record with respect to earnings that is reflected in its price performance for the last one year. While the stock has surged 33.7%, its industry gained only 1% in the same period.

However, our quantitative model does not conclusively show earnings beat for Motorola Solutions this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here, as you will see below:

Zacks ESP: Motorola Solutions has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 99 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Motorola Solutions has a Zacks Rank #2, which increases the predictive power of ESP. However, that alone is not sufficient to secure an earnings beat.

Conversely, we caution against a Zacks Rank #4 or 5 (Sell rated) stock going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Motorola Solutions, Inc. Price and EPS Surprise


Motorola Solutions, Inc. Price and EPS Surprise | Motorola Solutions, Inc. Quote

Factors Likely at Play

The company’s efforts to expand its product portfolio are encouraging. In fact, its performance has been boosted by the acquisition of Airwave Solutions, which was completed last year. Moreover, the Airwave Solutions buyout is anticipated to drive second-quarter revenues. Also, the acquisitions of Spillman Technologies and Interexport are expected to augment the top line.

Motorola Solutions projects revenues in the to-be-reported quarter to improve in the band of 2% to 3% on a year-over-year basis. Adjusted earnings per share are expected to be in 98 cents to $1.03 range.

We are also impressed by the company’s efforts to reward investors through dividend payments and buybacks. Nevertheless, we believe that costs related to the abovementioned acquisitions will hurt the bottom line.

Moreover, adverse foreign currency movements might hamper results in the quarter. The company’s high debt levels also remain a concern.

Stocks to Consider

Investors interested in the broader Computer and Technology sector may consider the following stocks, since our model shows that these companies also possess the right combination of elements to come up with an earnings beat this time.

Citrix Systems CTXS has an Earnings ESP of +1.18% and a Zacks Rank #3. The company will report its second-quarter earnings numbers on Aug 2.

AMTEK, Inc. AME has an Earnings ESP of +1.61% and a Zacks Rank #3. The company will report its second-quarter earnings numbers on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow Electronics, Inc. ARW has an Earnings ESP of +1.13% and a Zacks Rank #2. The company will report its second-quarter earnings numbers on Aug 3.

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Motorola Solutions, Inc. (MSI): Free Stock Analysis Report
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AMTEK, Inc. (AME): Free Stock Analysis Report
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