Sirius XM Stock Appears Attractive At $6 Levels

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[Updated: 11/29/21] Siri Stock Updates

Sirius XM (NASDAQ:SIRI) recently reported its third quarter, in which both revenue and earnings were in line with our estimates. The company exceeded expectations on the top and bottom lines with its third-quarter earnings release of $2.2 billion, up 9% year-over-year (yoy), and EPS of 8 cents, up 33% yoy. It also reported a record 616,000 net new Sirius XM self-pay subscribers in Q3, and raised its full-year guidance after hitting its previous subscriber plan of nearly 1.1 million net additions in just nine months. The company’s operating and net income jumped as operating expenses remained largely flat at $1.6 billion amid revenue growth. To add to this, the company also announced a 50% increase in its quarterly dividend starting in November.

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For the full year 2021, Sirius XM increased its guidance for self-pay net subscriber addition, revenue, adjusted EBITDA and free cash flow. SIRI has a long history of providing conservative guidance and typically raises those figures throughout the year as it did in its Q3 report. For the full year, SIRI now expects total revenue of approximately $8.65 billion (up $150 million from previous forecasts), adjusted EBITDA of $2.75 billion (up $80 million from prior estimates), and free cash flow of more than $1.8 billion. (up $100 million from prior forecasts). We have updated our model after the Q3 release. now we predict serious revenue For the full year 2021 is projected to be $8.6 billion, up 8% annually. Looking at the bottom line, we now anticipate EPS to come in at 31 cents, compared to our earlier estimate of 25 cents. In view of changes in our revenue and earnings forecasts, we have revised our Sirius XM Valuation At $7 per share, based on $0.31 expected EPS and a 23.1x P/E multiplier for fiscal 2021 — roughly 15% above current market value. We believe the company’s stock looks cheap at current levels.

[Updated: 10/27/21] Sirius XM Q3 Pre-Earnings

Sirius XM (NASDAQ:SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal third-quarter results on Thursday, October 28. We expect Sirius XM stock to trade higher due to better-than-expected Q3 results with both revenue and earnings beating market expectations. , The company reported 31.4 million self-pay subscribers (as of June 2021) – who are paying for premium radio despite many connected cars having access to unlimited free or almost free options. Now that there are more cars on the road – the company expects to add 1.1 million accounts this year. It has already added 355,000 net new self-paying Sirius XM customers to its roll during the first six months of this year, so it expects the momentum to pick up in the last six months of 2021. Sirius XM has a long history of providing conservative guidance. For revenue, self-paying net customer additions, free cash flow, and adjusted EBITDA. The company typically raises those guidance figures throughout the year as it did in its Q2 report. For the full year, SIRI now expects total revenue of approximately $8.5 billion (up $200 million from the previous forecast), adjusted EBITDA of $2.67 billion, and free cash flow of $1.7 billion, both $100 million higher than prior estimates.

Our forecast suggests that Sirius XM is valued at approximately $7 per share, which is well above the current market price of $6. View our interactive dashboard analysis Sirius XM Pre-Earnings: What to expect in Q3? for more information.

(1) Revenue is expected to be slightly above consensus estimates

Trefis estimates Sirius XM’s 2021 third quarter revenue to be about $2.19 billion, slightly ahead of consensus estimates. The satellite radio company benefited from strong auto sales and dramatic advertising growth in Q2. For context, Sirius XM revenue grew 15% year-over-year (year-over-year) in Q2, driven by a 4% increase in the company’s average revenue per user to $14.57 and Sirius XM self-pay customers. was driven by a 3% increase in Advertising revenue jumped 82% over the previous year and was up 19% from 2019 levels. Overall, the company’s quarterly revenue was up 9% from where it was in Q2 two years ago. In addition, churn was lower in Q2, coming in at 1.5%.

(2) EPS is likely to marginally outperform consensus estimates

According to Trefis analysis, Sirius XM expects earnings per share in the third quarter of 2021 to be 8 cents, higher than the consensus estimate of 7 cents. In Q2, the company’s net income increased 75% and exceeded 11% from the pre-pandemic quarter. This increase was as high as $0.10, up nearly 2x on a per-share basis as a result of Sirius XM’s aggressive buyback.

For the full year, we expect Sirius’ net margin to increase to 12.8% in fiscal 2021, up from just 1.6% in 2020. This coupled with an increase of 8%. Sirius XM Revenue, the annual net income of $1 billion could increase to $1.1 billion in 2021. This could result in potential EPS growth from $0.03 in FY20 to approximately $0.25 in FY21.

(3) Estimated stock price is higher than the current market price

going by us Evaluation of Sirius XM, with an EPS estimate of about 25 cents in fiscal 2021 and a P/E multiplier of about 28x, this translates to a price of around $7, which is 15% higher than the current market price of $6.

Note: P/E multiples are based on year-end share price, and reported (or expected) adjusted earnings for the full year.

It’s helpful to see how its mates stack up. Siri Stock Comparison with Peers Shows how Sirius XM compares against peers on metrics that matter.

What if you’re looking for a more balanced portfolio instead? here is one high quality portfolio It has consistently outperformed the market since the end of 2016.

Returns Nov’21 MTD [1] YTD [1] 2017-21 [2]

Siri Returns 4%-3% 39%

S&P 500 Returns 1% 22% 105%

Trefis MS Portfolio Returns -3% 46% 297%

[1] Month-to-date and Year-to-date as of 11/29/2021

[2] Cumulative Total Return since 2017

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