Motorola Solutions, Inc.MSINYSE

Overview Intelligence Charts News Fundamentals

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $491.98 per share(market-calibrated)

+2.4%

Upside to Fair Value

Current

$480.22

Pure Model

$486.42

Fair Value

$491.98

Bull Case

$625.40

Bear Case

$370.42

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

4.82%

Calibrated Growth

3.91%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $486.42.

What's Driving This Ratingfor MSI

✓

CapEx already efficient

CapEx at 2.18% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 31.45% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 8.68% revenue growth, fading to 3.75% by Year 10. Revenue reaches $18.3B (vs $11.7B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $386.48/share (23.0x terminal FCF) while exit multiple gives $586.36/share (39.0x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $480.22, the market implies 4.82% perpetual growth — 107bps above the model's 3.75%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.80% indicates efficient cash generation. FCF reaches $4.6B by Year 10 (25.04% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.00

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.01%

Cost of Debt

Pre-tax Cost of Debt2.79%

Tax Rate23.18%

After-tax Cost of Debt2.15%

Equity Weight (E/V)89.10%

Debt Weight (D/V)10.90%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (89.10% × 9.01%) + (10.90% × 2.15%)

= 8.26%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$12.7B	$14.1B	$15.3B	$16.4B	$18.3B
EBIT	$4.0B	$4.4B	$4.8B	$5.2B	$5.8B
Tax	$926M	$1.0B	$1.1B	$1.2B	$1.3B
NOPAT	$3.1B	$3.4B	$3.7B	$4.0B	$4.4B
+ Depreciation	$434M	$481M	$521M	$561M	$627M
- Capex	$277M	$307M	$333M	$358M	$400M
- Δ NWC	$101M	$67M	$55M	$59M	$66M
Free Cash Flow	$3.1B	$3.5B	$3.8B	$4.1B	$4.6B
Discount Factor	0.924	0.788	0.672	0.574	0.452
Present Value	$2.9B	$2.8B	$2.6B	$2.4B	$2.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$4.6B

Terminal Growth Rate3.75%

WACC8.26%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$105.6B

PV of Terminal Value$47.8B

Exit Multiple Method

Year 10 EBITDA$6.4B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$179.1B

PV of Terminal Value$81.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$25.1B

PV of Terminal Value$47.8B

Enterprise Value$72.8B

(-) Net Debt$8.6B

Equity Value$64.2B

Shares Outstanding166M

Price per Share$386.48

Exit Multiple Method

PV of Projected FCFs$25.1B

PV of Terminal Value$81.0B

Enterprise Value$106.1B

(-) Net Debt$8.6B

Equity Value$97.5B

Shares Outstanding166M

Price per Share$586.36

Pure Model Fair Value

$486.42

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
6.26%	$628.55	$666.39	$719.30	$798.53	$767.61
7.26%	$530.06	$550.38	$576.49	$611.27	$659.91
8.26%	$459.21	$471.46	$486.42	$505.12	$529.13
9.26%	$404.28	$412.24	$421.64	$432.91	$446.68
10.26%	$359.66	$365.11	$371.39	$378.72	$387.38

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$370.42

-22.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.25

Base Case

$486.42

1.3% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.00

Bull Case

$625.40

30.2% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.85

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth8.68%

Year 3 Revenue Growth4.99%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin31.45%

Tax Rate23.18%

Historical Capex / Rev2.18%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance