Motorola Solutions Inc

Motorola Solutions (Motorola) was one of the largest detractors during the quarter. Shares declined as higher memory and supply chain costs weighed on near-term margin expectations. While these factors affected near-term results, they do not change our long-term thesis. At the core of the company is its land mobile radio business, which provides the communication backbone used by police, fire, and emergency responders—particularly during natural disasters or other high-stress situations when commercial networks may become congested or unavailable. Importantly, Motorola is using this installed base to broaden its platform, integrating radios with video security and command center software to help agencies unify voice, video, and data across public safety workflows.

Motorola Solutions contributed positively to performance, with organic revenue up 7% and orders growing in the double digits for the third consecutive quarter. The Company's core Land Mobile Radio (LMR) business offers a unique value proposition to its customers, particularly local governments and public safety agencies. LMR technology is well suited for inclement weather and harsh conditions because its antennas generate a high-powered signal, unlike competing modes of communication, which rely on clusters of low-power deployments. In addition, Motorola's command center software and new unmanned aerial communication platform (Silvus) are value-added services that public-safety customers are increasingly adopting to do more with the same personnel. We continue to hold Motorola as a core position in portfolios, having added to it in the fourth quarter of 2025.

Motorola Solutions, Inc. is a global leader in mission-critical communications and security solutions, providing essential communication infrastructure for public safety and enterprise customers. The company generates steady revenue from its legacy land mobile radio (LMR) business and is expanding into higher-margin software and video services. With a strong focus on innovation and a global distribution network, Motorola is well-positioned to benefit from ongoing cloud migration and the adoption of software as a service (SaaS) in its offerings. We believe the current valuation reflects an attractive opportunity for long-term earnings growth.

Motorola Solutions grew its revenues +8% and earnings per share +9%, with expectations for similar growth in 2026 despite challenges like a government shutdown and dilution from its acquisition of Silvus Technologies. The company is seeing accelerating organic orders in both products and services, which have reached double-digit growth. As the stock sold off, it became more attractive on a relative and historical forward price-to-earnings basis, prompting us to add to our positions. We anticipate accelerating growth into 2026.

Motorola Solutions' underlying results remain quite positive, but an acquisition will dilute earnings and an expectation for tariff headwinds helped to dampen performance.

Motorola Solutions is mentioned as a prominent example of a relatively unknown stock in the large-cap growth company universe. The manager notes that they tend to buy well-known companies when other investors are not interested, indicating a strategy of capitalizing on market disinterest. However, there is no explicit bullish or bearish argument made regarding Motorola Solutions' future performance or valuation.