Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal fourth-quarter results on Thursday, February 2. We expect Sirius XM stock to likely trade higher due to better-than-expected Q4 results with revenue and earnings beating market expectations. In Q3, the company’s self-pay subscribers remained roughly at 32.2 million, up from 30 million at the start of 2020. Its growth has been achieved despite high car and lofty gas prices. It should be noted that the media company benefits from a historically meager churn rate (1.5% in Q3), 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. In spite of the higher costs in FY2022, Sirius’ paid users have been growing and its cash flow looks promising.
The company’s management guided to full-year revenue for fiscal 2022 of between $9 billion to $9.04 billion, a rough 3.5% growth – driven by the number of self-paid net subscribers increasing year over year (y-o-y). The company also believes it will produce $1.55 billion worth of free cash flow and forecasts an EBITDA of $2.8 billion in FY 2022.
Our forecast indicates that Sirius XM’s valuation is $6.42 per share, which is 2% higher than the current market price of $5.87 (as of Jan 31). Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q4? for more details.
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(1) Revenues expected to be slightly above the consensus estimates
Trefis estimates Sirius XM’s Q4 2022 revenues to be around $2.3 Bil, marginally above the consensus estimate. SIRI revenues climbed from $2.20 billion in Q3 2021 to $2.28 billion in Q3 2022. Subscriber growth was flat at Pandora and rose only one percent overall during the quarter. It should be noted that the advertising revenues were up 6% from the same period a year ago. This resulted in an average revenue per user (ARPU) of a record $15.72, up 88 cents from Q3 2021. 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 comfortably
Sirius XM’s Q4 2022 earnings per share (EPS) is expected to be 9 cents as per Trefis analysis, higher than the consensus estimate of 8 cents. The company’s diluted earnings per share were $0.06 in the third quarter, down 25% y-o-y. A surge in programming and content costs, as well as a rise in sales and marketing expenses under the broader operations of the company, led to this decline in profitability. The company’s adjusted EBITDA came in at $720 million, flat from the same period a year ago. Also, its free cash flow dropped 44% y-o-y to $329 million in Q3.
(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 nearly $6.42.
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.
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 Month-to-date and year-to-date as of 1/31/2023
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