Sirius XM, a leading satellite radio provider, is set to release its fiscal second-quarter results on August 1. Despite expectations of beating revenue estimates, the company’s stock is likely to trade lower due to anticipated earnings missing market expectations. SIRI’s stock has seen a decline of 34% year-to-date, underperforming the broader market indices. The company has been facing challenges in advertising and a slow recovery in the auto sales industry, impacting its stock price which has been trading at low levels of around $3 for over a year. Additionally, the company remains heavily in debt at $9.4 billion.
For the full year 2024, Sirius XM expects total revenue of approximately $8.75 billion, adjusted EBITDA of $2.7 billion, and $1.2 billion in free cash flow. The company saw a setback during the pandemic with a decline in revenue in FY 2023. To compete with larger competitors, Sirius XM will need to focus on its content to stimulate growth in its business. SIRI stock has experienced a sharp decline of 35% over the past few years, compared to an increase of 45% for the S&P 500. Despite inconsistent returns in recent years for SIRI stock, the company will need to concentrate on content to stay competitive in the market.
It has been difficult for individual stocks to consistently outperform the S&P 500 in recent years, including heavyweights in the Communication Services sector and megacap stars. The Trefis High Quality Portfolio has outperformed the benchmark index consistently over the same period by providing better returns with less risk. Amid uncertain economic conditions, SIRI may face challenges in underperforming the S&P over the next 12 months, or it may see a recovery. Trefis forecasts indicate Sirius XM’s valuation to be around $3 per share, 15% lower than the current market price.
Trefis estimates that Sirius XM’s Q2 2024 revenues will be around $2 billion, below consensus estimates. The company has struggled to grow its subscriber base, with a decrease in self-pay subscribers in the first quarter of 2024. Despite minor growth in advertising revenue, subscriber revenue declined slightly. Similarly, EPS is expected to miss consensus estimates for Q2 2024, with an estimate of 7 cents per share. Sirius XM’s net income for the first quarter of 2024 increased year-over-year, resulting in diluted earnings per share of $0.07.
Based on Trefis analysis, Sirius XM’s stock price estimate is lower than the current market price, with a projected price of around $3 in fiscal 2024. The company’s EPS estimate and P/E multiple translate to a price lower than the current market value. Comparisons with peers show how Sirius XM’s stock performance measures up against competitors. Investors may need to consider the company’s growth strategies and financial performance to make informed decisions about investing in Sirius XM.
