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Motorola Solutions, Inc. (MSI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Motorola Solutions, Inc. (MSI)

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Intrinsic Value (DCF)

Current$394.44
→
Intrinsic$278.25
-29%
$178.00$278.25$477.72
Market implies 22% growth for 5 years
MSI trades at a premium to our conservative estimate — investors expect above-average performance.
At $394, the market prices in continued strong cash flow growth (22%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $178 → Bull $478. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →9%11%13%15%
8%$351$384$420$458
10%$232$255$278$304
12%$170$186$204$222
14%$131$144$158$172

Bull Case

  • Bull case ($478) offers 21% upside at 16% growth, 8% discount
  • Conservative 13% growth assumption is achievable based on track record

Bear Case

  • Bear case ($178) implies 55% downside at 11% growth, 12% discount
  • Price reflects 22% growth expectations vs 13% historical — high bar to clear
  • Trading 29% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$2.42B
Year 2$2.74B
Year 3$3.11B
Year 4$3.52B
Year 5$3.99B
Terminal$63.18B

📐 Model Inputs

Growth Rate13.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$2.13BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MSI stock undervalued or overvalued?
🔴 OVERVALUED

MSI trades at $394.44 vs. our DCF-derived intrinsic value of $278.25, implying -27% downside. Using a 9.5% WACC and 13.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($419.32) suggests limited upside.

What is MSI's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.13B, projected at 13.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.45B net debt and dividing by 0.17B shares: Bear $180.75 | Base $278.25 | Bull $419.32. Current price $394.44 implies -27% to base case.

How is MSI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($51.97B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.4x.