Sirius XM (NASDAQ: SIRI), a leading provider of satellite radio, is scheduled to announce its fiscal first-quarter results on Thursday, April 27. We expect Sirius XM stock to likely trade higher with revenue and earnings beating market expectations. It should be noted that 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 in the coming quarters. In spite of the higher costs in FY2022, Sirius’ paid users have been growing. The company said it ended 2022 with 32.4 million self-pay subscribers, an increase of 348K for the year, up from 30 million at the start of 2020. Its growth has been achieved despite high car and lofty gas prices. In 2022, total revenue increased 4% year-over-year (y-o-y) to 9 billion, led by subscription revenue growth and modestly higher ad revenue, although ad revenue did begin to soften later in the year. Also, its adjusted EBITDA grew 2% to 2.83 billion.
For the full-year 2023, the company warned that they expected modestly negative self-pay net adds for the year as economic and demand uncertainty persists. SIRI also mentioned that it expects total revenue of approximately $9.0 billion, adjusted EBITDA of approximately $2.7 billion, and free cash flow of approximately $1.05 billion in FY 2023 (compared to $1.55 billion in 2022).
Our forecast indicates that Sirius XM’s valuation is $4.80 per share, which is 36% higher than the current market price of $3.69 (as of April 25). Look at our interactive dashboard analysis on Sirius Earnings Preview: What To Expect in Q1? for more details.
(1) Revenues expected to be slightly above the consensus estimates
Trefis estimates Sirius XM’s Q1 2023 revenues to be around $2.2 Bil, marginally above the consensus estimate. Sirius XM reported flat y-o-y revenue growth of $2.28 billion which missed expectations by $30 million. SIRI’s music streaming service Pandora finished 2022 with 47.6 million monthly active users, down 9% from 52.3 million in 2021. For the full year 2023, we forecast Sirius Revenues to be $9.1 billion, up 0.6% y-o-y.
(2) EPS likely to beat consensus estimates comfortably
Sirius XM’s Q1 2023 earnings per share is expected to be 8 cents as per Trefis analysis, higher than the consensus estimate of 7 cents. SIRI’s net income for the fourth quarter of 2022 was $369 million resulting in diluted earnings per share of $0.09, up from $0.08 for the same quarter of 2021. EPS also beat the average analyst estimate by a penny.
(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 15.3x in fiscal 2023, this translates into a price of nearly $5.
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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