Motorola Solutions’ Initiatives to Improve Shareholder Value



Improvement in operating margin and cash flow

In the chart below, we can see that Motorola Solutions (MSI) has improved its operating margin at a CAGR[1. compound annual growth rate] of 8.4% between 2013 and 2016. Its operating margin has improved from 18.6% to 23.6% during this period. Its free cash flow also rose 32.2% from $387.0 million in 2013 to $894.0 million in 2017.

Motorola Solutions’ operating expenses declined from $2.0 billion in 2013 to $1.5 billion in 2016. Its EPS (earnings per share) increased at a CAGR of 23.5% from $2.61 in 2013 to $4.20 in 2016.

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Capital return

MSI has returned $13.3 billion to shareholders between 2011 and 2016 in the form of share repurchases and dividends. MSI has allocated 50.0% of its free cash flow to share repurchases and acquisitions, 30.0% to dividends, and 20.0% to capital expenditure.

In 2016, MSI returned $1.1 billion to its shareholders—$300.0 million in the form of dividends and $800.0 million in the form of share repurchases. MSI’s capital returns in 2015, 2014, and 2013 were $3.4 billion, $3.0 billion, and $2.0 billion, respectively.

Dividend yields

At the end of 3Q17, MSI’s dividend yield was 2.1%, indicating an annualized payout of $2.08 per share. MSI has a dividend payout ratio of 40.5% with dividend growth for the last seven consecutive years.

In the last three years, MSI’s dividend has grown at a CAGR of 14.0%. Among its peer communication equipment technology (QQQ) firms, Harris Corporation (HRS) and L3 Technologies (LLL) have dividend yields of 1.6% and 1.4%, respectively.


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