Can Healthy Top-Line Improvement Aid Motorola's Q3 Earnings?

Motorola Solutions, Inc. MSI is scheduled to report third-quarter 2025 results on Oct. 30, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 6.2%. It pulled off a trailing four-quarter earnings surprise of 6.8%, on average.

The Chicago, IL-based company is expected to have recorded year-over-year higher revenues on the back of growth in both segments — Products and Systems Integration and Services and Software. It benefits from the increasing demand for its mission-critical technologies in North America and globally.

Factors at Play

During the to-be-reported quarter, Motorola announced that its AI-powered video security and access control solutions were deployed in the University of Palermo. Designed to proactively detect potential threats, automatically alert security personnel and lock down physical access to classrooms and campus facilities, the solutions help to protect countless students, teachers and staff throughout the college’s campus. This is likely to have generated incremental revenues during the quarter.

In the quarter, Motorola launched Inform – an AI-assisted incident response solution across on-premise, cloud-based and other third-party security deployments. It helps security teams identify and respond to complex threats by intelligently grouping multiple, seemingly disparate events into a single, actionable incident, as security enterprises are placing strong emphasis on strengthening their overall security ecosystems. This is driving demand for advanced communication devices from Motorola, likely translating into higher revenues for the quarter. 

During the quarter, Motorola announced that the São Paulo Subway has implemented its P25 land mobile radio (LMR) communication system to provide reliable coverage for a faster response to incidents, better operational coordination and increased safety for riders and staff. The company launched the WAVE PTX communication solution in the Dominican Republic and Peru. This broadband push-to-talk (PTT) subscription service allows business enterprises to instantly connect with different work teams for seamless operations. These are likely to be reflected in the upcoming quarterly results.

During the third quarter, Motorola collaborated with Nokia to develop a next-generation, containerized, tactical communications network solution for U.K. defense agencies. The modular system leverages the Terrestrial Trunked Radio (TETRA) infrastructure of Motorola and Nokia's 5G AirScale portfolio for reliable and secure voice and data communications on the front lines. The TETRA LMR network was also deployed across Poland to support critical communications and grid resiliency for homes, businesses, schools and hospitals.

Riding on such state-of-the-art products, Motorola expects to record strong demand across video security and services, LMR products and related software while benefiting from a solid foundation. These systems drive the demand for additional device sales and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations. These developments are expected to have positively impacted its performance in the second quarter.

The Zacks Consensus Estimate for the Products and Systems Integration segment’s revenues is pegged at $1.85 billion. The figure indicates a rise from $1.78 billion recorded in the year-ago quarter. Our estimate for revenues from this segment is $1.85 billion, implying 3.7% year-over-year growth. The Zacks Consensus Estimate for the Services and Software segment’s revenues is pegged at $1.15 billion, up from $1.01 billion recorded in the year-earlier quarter. Our estimate for revenues from this segment is $1.14 billion, suggesting 13.2% year-over-year growth.  

For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $2.99 billion, which indicates growth from the year-ago quarter’s reported figure of $2.79 billion. The consensus estimate for adjusted earnings per share is $3.85, which suggests an increase from $3.74, driven by top-line growth.

Earnings Whispers

Our proven model does not predict an earnings beat for Motorola for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% with both pegged at $3.85 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Motorola carries a Zacks Rank #2.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Advanced Micro Devices, Inc. AMD is set to release quarterly numbers on Nov. 4. It has an Earnings ESP of +0.18% and carries a Zacks Rank #3. 

The Earnings ESP for Fortinet, Inc. FTNT is +4.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov. 5.

The Earnings ESP for Qualcomm Incorporated QCOM is +1.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov. 5.

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This article originally published on Zacks Investment Research (zacks.com).

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