Why Motorola Solutions (MSI) Stock Is Down This Afternoon

NEW YORK (TheStreet) -- Shares of Motorola Solutions Inc. (MSI) are down -2.71% to $61.86 after the company reported a -34% decline in first quarter profit, affected by lower sales to government customers and businesses.

Net income fell to $127 million, or 49 cents per share, for the quarter, from $192 million, or 68 cents per share, a year ago.

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Excluding items, the company earned 50 cents per share.

Revenue fell to $1.8 billion from $1.97 billion.

For the second quarter, Motorola Solutions expects a revenue decline of 5% to 8% compared with the second quarter of 2013, with non-GAAP earnings per share in the range of 58 cents to 64 cents per share.

For the full year 2014, the company expects a revenue decline of low single digits compared with 2013, with non-GAAP operating margins of approximately 18.5% of sales, consistent with the previous outlook.

TheStreet Ratings team rates MOTOROLA SOLUTIONS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MOTOROLA SOLUTIONS INC (MSI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MSI's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, MOTOROLA SOLUTIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $741.00 million or 31.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.04%.
  • The net income growth from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income increased by 1.8% when compared to the same quarter one year prior, going from $336.00 million to $342.00 million.
  • MSI's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MSI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.63 is high and demonstrates strong liquidity.
  • You can view the full analysis from the report here: MSI Ratings Report
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