Shareholders to benefit from repeat recent growth in Motorola Solutions returns (NYSE: MSI)



If you’re not sure where to start when looking for the next multi-bagger, there are a few key trends you should watch out for. In a perfect world, we would like a business to invest more capital in their business, and ideally the returns from that capital increase as well. Basically, it means that a business has profitable initiatives that it can keep reinvesting in, which is a hallmark of a dialing machine. And in light of this, the trends that we are observing at Motorola Solutions ” (NYSE: MSI) looks very promising, so let’s take a look.

Return on capital employed (ROCE): what is it?

Just to clarify if you’re not sure, ROCE is a measure of the pre-tax income (as a percentage) that a business earns on the capital invested in its business. Analysts use this formula to calculate it for Motorola Solutions:

Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.22 = US $ 1.8 billion ÷ (US $ 11 billion – US $ 3.2 billion) (Based on the last twelve months up to July 2021).

Thereby, Motorola Solutions has a ROCE of 22%. In absolute terms, this is an excellent performance and is even better than the communications industry average of 7.0%.

Check out our latest review for Motorola Solutions

NYSE: Return on Invested Capital of MSI September 25, 2021

In the graph above, we measured Motorola Solutions’ past ROCE against its past performance, but the future is arguably more important. If you’d like to see what analysts are forecasting for the future, you should check out our free report for Motorola Solutions.

What can we say about Motorola Solutions’ ROCE trend?

We love the trends we see at Motorola Solutions. Data shows that returns on capital have increased dramatically over the past five years to reach 22%. The amount of capital employed also increased by 24%. This may indicate that there are many opportunities to invest capital internally and at increasingly higher rates, a common combination among multi-baggers.

Motorola Solutions ROCE Basics

In summary, it’s great to see that Motorola Solutions can increase returns by systematically reinvesting capital at increasing rates of return, as these are some of the key ingredients in these highly sought-after multi-baggers. And with the stock having performed exceptionally well over the past five years, these trends are being taken into account by investors. So, given that the stock has proven to have some promising trends, it is worth doing more research on the company to see if these trends are likely to continue.

Like most businesses, Motorola Solutions comes with certain risks, and we have found 2 warning signs that you need to be aware of.

If you’d like to see other companies driving high returns, check out our free List of high yielding companies with strong balance sheets here.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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