Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal second-quarter results on Thursday, July 28. We expect Sirius XM stock to likely trade lower due to weaker-than-expected Q2 results with revenue and earnings both missing market expectations marginally. We expect impacts of inflation and headwinds in the auto industry to negatively impact the company’s results in the upcoming Q2. Also, Pandora continues to struggle to stabilize its MAUs and total listening hours. To add to this, the total company remains heavily in debt at $9.8 billion. Despite all this, the media company benefits from a historically meager churn rate, with an implied average life for new car purchases of around five years – thanks to its solid business model. By taking advantage of the advertising reach it receives through radio, Sirius XM could likely push Pandora into podcasting for further growth opportunities in the coming quarters.
Our forecast indicates that Sirius XM’s valuation is around $6 per share, which is 7% lower than the current market price. Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q2? for more details.
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(1) Revenues expected to be slightly below the consensus estimates
Trefis estimates Sirius XM’s Q2 2022 revenues to be around $2.2 Bil, marginally below the consensus estimate. Sirius Q1 revenue climbed 6% y-o-y to $2.19 billion – with strength in the off-platform business complementing its main satellite radio content stream. The company’s hardware was incorporated into about 83% of new vehicles sold in the U.S., up from about 81% in the year-ago period. Also, the enabled fleet grew to nearly 146 million vehicles, up 9% year-over-year. In addition, free cash flow rose about 22% to $258 million, on higher receipts from customers partly offset by bigger satellite capital expenditures. For the full year, we forecast Sirius Revenues to be $9.1 billion, up 4% y-o-y.
For the full year 2022, Sirius continues to expect self-pay net subscriber additions to grow by approximately 500,000, total revenue of approximately $9 billion, adjusted EBITDA of $2.8 billion, and free cash flow of approximately $1.5 billion.
(2) EPS likely to miss consensus estimates comfortably
Sirius XM’s Q2 2022 earnings per share (EPS) is expected to be 7 cents as per Trefis analysis, lower than the consensus estimate of 8 cents. The company swung to a net profit of $317 million (or 8 cents) from last year’s $224 million (or $0.05) in Q1.
(3) Stock price estimate lower than the current market price
Going by our Sirius XM’s Valuation, with an EPS estimate of around 31 cents and a P/E multiple of around 20.8x in fiscal 2022, this translates into a price of near $6.
It is helpful to see how its peers stack up. SIRI Peers shows how Sirius stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
|S&P 500 Return||5%||-17%||77%|
|Trefis Multi-Strategy Portfolio||9%||-16%||229%|
 Month-to-date and year-to-date as of 7/26/2022
 Cumulative total returns since the end of 2016