Down 45% Year To Date, What’s Happening With Sirius Stock?

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SIRI: Sirius XM logo
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Sirius XM

Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal first-quarter results on Tuesday, April 30. We expect Sirius XM stock to likely trade higher with revenues beating and earnings matching market expectations in the first quarter results. Sirius stock has been negatively impacted by headwinds in advertising and a delayed recovery in the auto sales industry since the beginning of 2023. The company’s stock is down 45% this year. Sirius XM’s revenue declined 0.6% for 2023, the first annual dip in the company’s history. In addition, subscriber revenue, advertising revenue, operating profit, and pre-tax income declined for all of 2023. Also, the company’s free cash flow of $1.2 billion was 23% lower than in 2022 -which itself happens to be 15% below where it landed in 2021.

Sirius XM’s guidance calls for $8.75 billion in revenue in FY 2024, 2% lower than the $8.95 billion it delivered in 2023. The media giant sees the free cash flow holding firm at $1.2 billion with a slight step down in adjusted earnings before interest, taxes, depreciation, and amortization. That said, 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. And, if we consider that SIRI stock now trades at 9x forward earnings with operating margins of 22% – the long-term price could see gains.

SIRI stock has suffered a sharp decline of 50% from levels of $6 in early January 2021 to around $3 now, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. SIRI has had a poor run, with the stock losing value in each of the last 3 years. Returns for the stock were 0% in 2021, -8% in 2022, and -6% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that SIRI underperformed the S&P in 2021 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Communication Services sector including GOOG, META, and NFLX, and even for the megacap stars TSLA, MSFT, and AMZN.
In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could SIRI face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months – or will it see a recovery?
Our forecast indicates that Sirius XM’s valuation is around $3 per share, which is 11% higher than the current market price. Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q1? for more details.

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  3. What To Expect From Sirius’ Q3 After Stock Down 28% This Year?
  4. What’s Next For Sirius Stock After A 26% Fall This Year?
  5. Sirius Q2 Earnings: What Are We Watching?
  6. What To Expect From Sirius XM’s Stock Post Q1?

(1) Revenues expected to come in slightly above the consensus estimates

Trefis estimates Sirius XM’s Q1 2024 revenues to be around $2.2 Bil, marginally above the consensus estimate. The company’s revenue clocked in at $2.3 billion in Q4, a mere 0.2% increase year-over-year (y-o-y). However, it’s the first time that the satellite radio provider posted a top-line increase after three consecutive y-o-y declines. For the full year 2024, we forecast Sirius Revenues to be $8.8 billion, down 1.2% y-o-y.

(2) EPS likely to match consensus estimates 

Sirius XM’s Q1 2024 earnings per share (EPS) is expected to be 7 cents as per Trefis analysis, in line with the consensus estimate. Its profit of $0.09 came in flat in Q4 2023. It should be mentioned that the company has now posted three consecutive quarter beats on the bottom line.

(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 10.7x in fiscal 2024, this translates into a price of around $3, almost 11% higher than the current market price.

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.

Returns Apr 2024
MTD [1]
2024
YTD [1]
2017-24
Total [2]
 SIRI Return -22% -45% -32%
 S&P 500 Return -4% 6% 125%
 Trefis Reinforced Value Portfolio -6% 0% 613%

[1] Returns as of 4/26/2024
[2] Cumulative total returns since the end of 2016

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