Sirius XM Holdings (SIRI)

jojoc
2023-09-23

$Sirius XM(SIRI)$  
A decade ago, Sirius XM Holdings (NASDAQ:SIRI) wasn’t that good of an investment. However, the business has improved since then.
Sirius investors only gained a 19% total return over the past ten years. The S&P 500 tripled in value in that time frame while the Nasdaq 100 grew five-fold.

So why buy Sirius now? Shares are down 30% YTD on fears of ad revenue drying up and a recession taking a toll on new vehicle sales.

First, the automotive industry is coming out of its slump from Covid19 pandemic. New car sales surged 15% higher in August year over year, which should increase new subscription sales where they actually makes most of its money. Q2 revenue was $2.25 billion with subscriptions accounting for $1.73 billion worth. Most of Sirius’ ad revenue came from the music streaming service Pandora that it acquired four years ago.

Most importantly, SIRI still produces a lot of cash. Management forecasts it will end the year with $1.2 billion of free cash flow.

The stock trades at just 12 times next year’s earnings estimates, less than twice its sales, and a deeply discounted 12 times FCF.Yet over the past decade, it solidified its finances and now offers an attractive valuation.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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