Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Motorola Solutions, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.7% to 9.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 108, DPO 85, DIO 65). At a 8.9% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $354.56 per share, suggesting MSI is overvalued by 21.5% at the current price of $451.40.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,792 | 2,952 | 3,100 | 3,389 | 3,706 | 3,799 |
| (−) Net Interest | 346 | 365 | 384 | 420 | 459 | 470 |
| (+) D&A | 255 | 272 | 290 | 313 | 341 | 350 |
| EBITDA | 3,393 | 3,590 | 3,774 | 4,122 | 4,506 | 4,619 |
| (−) Tax | 516 | 545 | 572 | 626 | 684 | — |
| (−) CapEx | 329 | 348 | 365 | 400 | 437 | — |
| (−) ΔWC | -25 | 195 | 179 | 353 | 386 | — |
| Free Cash Flow (FCF) | 2,573 | 2,502 | 2,657 | 2,743 | 2,999 | — |
| Peers' EBITDA Multiple | 19.0x | |||||
| Terminal Value | 87,621 | |||||
| WACC / Discount Rate | 8.87% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,466 | 2,202 | 2,148 | 2,038 | 2,046 | 57,298 |
| Enterprise Value | 68,198 | |||||
| Projection Period | 10,900 | 16.0% | ||||
| Terminal Value | 57,298 | 84.0% | ||||
| (−) Current Net Debt | 8,601 | |||||
| Equity Value | 59,597 | |||||
| (÷) Outstanding Shares | 168M | |||||
| Fair Price | $355 | -21.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.0x | 17.0x | 19.0x | 21.0x | 23.0x |
|---|---|---|---|---|---|
| 6.9% | $312 | $351 | $391 | $430 | $470 |
| 7.9% | $297 | $334 | $372 | $410 | $447 |
| 8.9% | $283 | $319 | $355 | $391 | $426 |
| 9.9% | $269 | $304 | $338 | $372 | $407 |
| 10.9% | $257 | $289 | $322 | $355 | $388 |
Current price: $451.40. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.