QS Research · Michael Burry's Scion Capital analyst template · 2006
Motorola Solutions, Inc. (MSI)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case 0% · downside -17% · upside +17%
MSI is a genuine secular compounder—revenue rose every year from $7.41B in FY2020 to $11.68B in FY2025 and TTM revenue is $12.60B—but the market is not missing the quality: at $514.51 it trades at 25.9x EV/EBITDA, 40.8x P/E and a 3.0% FCF yield. Using section 13's TTM base ($3.64B EBITDA, $10.11B debt, $774M cash, 165.33M shares), 22x gives about $424-$428/share (-17%), 30x gives about $601-$604/share (+17%), and the current 25.9x is essentially today's price (0%). The GAAP optics are muddied by the Silvus earnout and a ~$70M IEEPA refund, but even on operating/TTM cash earnings the risk/reward is roughly symmetric. I pass: no 30% base-case upside and no 25%-capped upside case for a short.
Key numbers
- Share price: $514.51
- Market cap: $85.07B
- Latest financial period: TTM to Oct 3, 2026
- Revenue (TTM): $12.60B
- EV / EBITDA (TTM): 25.9x
- P/E (TTM): 40.8x
- Price / book: 27.72x
The 15 boxes
- ✓ 1. Long-form business notes
Motorola Solutions sells mission-critical communications, video security and command-center software to public safety, government/defense and enterprise customers, organized in two segments: Products and Systems Integration (FY2025 net sales $7.3B, 62% of consolidated) and Software and Services ($4.4B, 38%). Revenue rose every year from $7.41B in FY2020 to $11.68B in FY2025 with operating income going from $1.38B to $2.99B, so this is a secular-compounder file, not a cyclical recovery. Between the FY2020 and FY2025 10-Ks the three-technology architecture held, but LMR was renamed Mission Critical Networks after the August 2025 Silvus acquisition, and the Software and Services mix shifted toward Video and Command Center while LMR/MCN services shrank as a share. Revenue is concentrated in products installed into customers' systems and then monetized for years through support, managed services and subscription hardware.
- ✓ 2. Competitive advantage
The record supports a durable but non-exclusive advantage: an installed base of more than 100,000 customers in over 100 countries, systems with 'multi-year or multi-decade lifespans', and $15,742M of backlog at 12/31/2025 (versus $14,697M a year earlier), of which $11,930M sits in Software and Services. Economics look consistent with that: gross profit $3.61B (FY2020) to $6.04B (FY2025) and operating income $1.38B to $2.99B, with operating cash flow of $2.84B in FY2025 against capex of just $265M. But it is not a licence or cost monopoly: Motorola names 15 MCN, 18 Video and 15 Command Center competitors and states it faces 'widespread competition from a growing number of existing and new competitors'. The moat is best described as switching costs plus the integration of MCN, Video and Command Center into one system, bought partly with acquisitions and funded by $970M of FY2025 R&D.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-10-03) net sales rose 12% to $3.376B from $3.009B, but only ~$211M of the $367M increase came from acquisitions and $11M from favorable FX, so organic growth was roughly 6%. Operating earnings were essentially flat, $777M vs $770M, and operating margin fell to 23.0% from 25.6%, with the compression traceable to non-operating-grade items inside Other charges: an $87M Silvus contingent earnout charge, intangible amortization up to $97M from $66M, and Hytera litigation gains down to $13M from $74M. Gross margin actually improved to 52.4% from 51.6%, and the nine-month gross margin carries a ~$70M favorable IEEPA tariff refund that is a one-off. Cash generation is flat — operating cash flow $1.582B vs $1.581B for the first nine months — while debt rose to $10.1B from $9.2B at 2025-12-31 on the $1.3B D-Fend deal, and management flags deliberately elevated inventory because of memory cost inflation.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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