Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal third-quarter results on Tuesday, November 1. We expect Sirius XM stock to likely trade higher due to better-than-expected Q3 results with revenue and earnings beating market expectations marginally. In Q2, the company’s self-pay subscribers remained roughly at 32 million, up from 30 million at the start of 2020. This growth is despite high car and lofty gas prices pressuring the company’s business. It should be noted that the media company benefits from a historically meager churn rate (1.5% in Q2), 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.
For the full-year 2022, Sirius XM expects that another improvement in self-paying subscribers will drive total revenue to $9 billion, representing 0.9% sequential growth and 3.5% year-over-year (y-o-y) growth. The company forecasts adjusted EBITDA of $2.8 billion in 2022 versus $2.77 billion in 2021. While free cash flow is expected to hover around $1.55 billion, which, although less than $1.83 billion in 2021, shouldn’t bother shareholders as the company is still able to raise more than 70% of the amount to be spent on shareholder compensation and investments.
Our forecast indicates that Sirius XM’s valuation is around $6 per share, which is 4% higher than the current market price. Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q3? for more details.
(1) Revenues expected to be slightly above the consensus estimates
Trefis estimates Sirius XM’s Q3 2022 revenues to be around $2.3 Bil, marginally above the consensus estimate. Sirius Q2 saw revenue growth of just over 4% y-o-y to $2.25 billion and was in line with expectations. The company’s total subscribers at quarter-end were 34 million, and the trial funnel was about 7.3 million, up from 6.9 million a quarter ago. For the full year, we forecast Sirius Revenues to be $9.1 billion, up 4% y-o-y.
(2) EPS likely to beat consensus estimates marginally
Sirius XM’s Q3 2022 earnings per share (EPS) is expected to be 9 cents as per Trefis analysis, higher than the consensus estimate of 8 cents. In Q2, the company’s EPS missed the average analyst estimate by a penny. The company’s diluted earnings per share were $0.07 in the second quarter. Sirius’ EPS was $0.10 in last year’s second quarter where it booked approximately $140 million of satellite insurance recoveries. Also, its adjusted net income was near flat and EBITDA fell 3% y-o-y to $679 million.
(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 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||9%||-18%||74%|
|Trefis Multi-Strategy Portfolio||7%||-22%||210%|
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