Pullback for This Holding Brings Room to Pick Up More Shares

Last week, Motorola Solutions (MSI) reported a beat-and-raise Q1 2026 that included in-line EPS for the current quarter on expected revenue growth of 8.5% year over year. The company also nudged its 2026 revenue forecast to $12.8 billion, up from $12.7 billion and upped its EPS guidance for the year to $16.87 to $16.99 versus the $16.78 consensus and the $15.38 posted in the year-ago quarter.

Backing that guidance, Motorola Solutions’ backlog closed the quarter at $15.7 billion, up 11% year over year. On its earnings call, Motorola shared that it sees $60 million in tariff headwinds this year, primarily in 1H 2026, and models its memory spend doubling this year to around $100 million. On the same call, the management discussed rising AI adoption across the public safety landscape.

We’ve shared those findings, which are lifting MSI shares higher following that report late last week, as a counterbalance to the results and guidance served up by Axon (AXON) earlier in the week.

As a reminder:

Axon’s Q1 2026 revenue grew more than 33% year over year
Software and Services grew 35% year over year, and Product sales climbed 33% year over year, easily outpacing Motorola’s respective segment growth
Future contracted bookings rose 44.4% year over year to $14.3 billion
And Axon also discussed margin headwinds, but it also sees stronger margins in 2H 2026

Those figures point to Axon growing its business faster, and as we’ve discussed before, the management team has a 2028 bogie of $6 billion in revenue and 28% adjusted EBITDA margins. Those figures as well as the demand profile for public safety mixed with Axon’s future contracted bookings has Wall Street eyeing EPS of $7.69 this year to almost $13.50 in 2028. At Motorola those figures are $16.95 for 2026 going to $20.45.

Here’s the thing: Using 2025 as a base, those figures have Axon growing its EPS at a compound annual growth rate of more than 25% through 2028 compared to about 10% for Motorola Solutions.

That is illuminating on the topic of valuation, and here’s why:

While Axon’s shares trade at a P/E of just under 50x this year and 36x 2027 EPS figures, the PEG ratios for those years are 1.96 and 1.42, respectively, compared to 2.26x and 2.14x for Motorola Solutions in 2026 and 2027.

Like I said, illuminating, and insightful when the market is hitting stocks with “stretched” valuations.

The renewed pullback in AXON shares brings with it room to scoop up some additional shares for the Portfolio. Given renewed U.S.-Iran uncertainties and the S&P 500’s relative strength index over 75, we’re not in a rush. We will tune into Axon’s management presentation on Tuesday and Wednesday, listening for more color on the current quarter, AI adoption and other items.

May 12 to 21: Annual Needham Technology, Media & Consumer Conference

May 13 : BofA Securities 33rd Annual Industrials, Transportation & Airlines Key Leaders Conference

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At the time of publication, TheStreet Pro was long AXON shares.