Does Sirius Stock Look Attractive At $6?
[Updated: 02/17/22] SIRI Stock Update
Sirius XM (NASDAQ: SIRI) recently reported its Q4 report, wherein revenues and earnings both were in line with our estimates. The company surpassed consensus expectations on the top and bottom lines in its Q4 earnings with reported revenues of $2.3 billion, up 4% year-over-year (y-o-y), and EPS of 8 cents, compared to 16 cents in the year-ago quarter. The company swung to a net profit of $318 million from a year-ago loss of $677 million. It should be noted that the Q4 2020 quarter saw an impact from a $976 million non-cash impairment tied to Pandora. For the full-year 2021, SIRI added 1.15 million net new self-pay subscribers, up 27% y-o-y, to land at a record 32 million. Total subscribers reached 34 million and paid promotional subs fell by 1.83 million, due to continuing impacts of new vehicle trial structures with certain automakers as well as lower vehicle shipments due to reported semiconductor supply shortages. In addition, self-pay monthly churn for the full year improved by about 5 basis points, to 1.6%. Meanwhile, a special dividend of $0.25 per share (about $1 billion in total) was also announced in the Q4 report.
SIRI has a long history of providing conservative guidance and it typically raises those figures throughout the year as seen in all four quarters of 2021. For the full year 2022, Sirius expects self-pay net subscriber additions of approximately 500,000, total revenue of approximately $9 billion, adjusted EBITDA of $2.8 billion, and free cash flow of over $1.6 billion. We have updated our model following the Q4 release. We also forecast Sirius Revenues to be $9 billion for the full year 2022, up 8% y-o-y. Looking at the bottom line, we now forecast EPS to come in at 32 cents. Given the changes to our revenues and earnings forecast, we have revised our Sirius XM Valuation at $7 per share, based on $0.32 expected EPS and a 21.5x P/E multiple for fiscal 2022 – almost 13% higher than the current market price. We believe that the company’s stock appears cheap at the current levels.
[Updated: 01/31/22] Sirius XM Q4 Pre-Earnings
Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal fourth-quarter results on Tuesday, February 1. We expect Sirius XM stock to likely trade higher due to better-than-expected Q4 results with revenue and earnings both beating market expectations. Sirius XM reported a record 616,000 net new SiriusXM self-pay subscribers in Q3 and raised its full-year guidance after hitting its previous subscriber plan of approximately 1.1 million net additions in just nine months. In fact, the company has a long history of providing conservative guidance for revenue, self-pay net subscriber additions, free cash flow, and adjusted EBITDA. The satellite radio company typically raises those guidance figures throughout the year as it did throughout 2021. For the full year, SIRI now expects total revenue of approximately $8.65 billion (up by $150 million from the previous forecast), adjusted EBITDA of $2.75 billion, (up by $80 million from prior estimates), and free cash flow of over $1.8 billion (up $100 million from the prior forecast).
Our forecast indicates that Sirius XM’s valuation is around $7 per share, which is above the current market price of $6. Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q4? for more details.
(1) Revenues expected to be slightly above the consensus estimates
Trefis estimates Sirius XM’s Q4 2021 revenues to be around $2.3 Bil, marginally ahead of the consensus estimate. The company surpassed expectations on the top and bottom lines in its Q3 earnings with reported revenues of $2.2 billion, up 9% year-over-year (y-o-y), and EPS of 8 cents, up 33% y-o-y. For the full year, we forecast Sirius Revenues to be $8.6 billion, up 8% y-o-y.
(2) EPS likely to beat consensus estimates comfortably
Sirius XM’s Q4 2021 earnings per share (EPS) is expected to be 8 cents as per Trefis analysis, higher than the consensus estimate of 7 cents. In Q3, the company’s operating and net income jumped as operating expenses remained largely flat at $1.6 billion amid the revenue boost. To add to this, the company also announced a 50% boost to its quarterly dividend starting in November. For the full year, we forecast EPS to come in at 31 cents
(3) Stock price estimate higher than the current market price
Going by our Sirius XM’s Valuation, with an EPS estimate of around 31 cents and P/E multiple of around 23.1x in fiscal 2021, this translates into a price of almost $7, which is 13% ahead of the current market price. This represents a P/EBITDA multiple of 15.3x for the company based on our forecast for SIRI’s EBITDA for the current fiscal year.
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
It is helpful to see how its peers stack up. SIRI Stock Comparison With Peers shows how Sirius XM compares against peers on metrics that matter.
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|S&P 500 Return||-1%||-6%||100%|
|Trefis MS Portfolio Return||3%||-7%||265%|
 Month-to-date and year-to-date as of 2/16/2022
 Cumulative total returns since the end of 2016