Key initiatives for the company include the formation of the S&P Dow Jones Indices and S&P Capital IQ’s acquisitions of Credit Market Analysis Limited, QuantHouse, R2 Financial Technologies and TheMarkets.com. During the fourth quarter, both segments (S&P Capital IQ and S&P Dow Jones Indices) saw revenue up 15% year-over-year. With analysts expecting the company to grow EPS at an impressive annualized 18.3% over the next five years, its PEG ratio is at 0.9, making the stock a growth at a reasonable-price opportunity.
ValueAct kept Motorola Solutions Inc (NYSE:MSI) as its number-one stock holding, making up 20.9% of its total public-equity portfolio. Motorola Solutions Inc (NYSE:MSI) remains the largest developer of public-safety products, owning nearly 50% of the total market share in the U.S. Motorola Solutions recently posted 1Q EPS of $0.66 versus $0.59 for the same quarter last year but below consensus forecast of $0.67.
The company is also looking to expand beyond the U.S., with entry into Europe, the Middle East, Australia and Latin America. One of the long-term revenue boosters will be the U.S. government’s plan to install a nationwide wireless network for public safety. Industry researchers have estimated that the market size of public safety may reach $6.5 billion in 2014, while management is looking for a business prospect of more than $1 billion in the next three-to-four years.
Motorola Solutions Inc (NYSE:MSI) also has an agreement with Verizon Communications Inc. (NYSE:VZ) Wireless to install a standard-based public-safety broadband network for mission-critical operations leveraging on the nationwide LTE network of Verizon Communications Inc. (NYSE:VZ). ValueAct has the largest position by far in Motorola Solutions, however, there are a few other funds loving the communications stock (see all the funds here).
Don’t be fooled
ValueAct fell out of love with Halliburton and Moody’s, and for good reason. Halliburton Company (NYSE:HAL) still has overhang related to the Deepwater incident and Moody’s has overhang from the 2008 financial crisis. However, ValueAct did trade out one credit-rating agency for another, selling Moody’s and buying up McGraw Hill.
McGraw has made some strategic acquisitions lately to help hedge the same overhang Moody’s Corporation (NYSE:MCO) is seeing. Meanwhile, Microsoft has interesting exposure to the cloud space and ValueAct’s top bet, Motorola Solutions, is an industry leader. I tend to agree with all of ValueAct’s moves, but as always, doing your own research is recommended.
The article ValueAct Shakes Things Up originally appeared on Fool.com and is written by Marshall Hargrave.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Halliburton. The Motley Fool owns shares of Microsoft. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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