This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Sirius XM Could Touch $4.60 by March

Analysts now expect Sirius to close its fiscal 2013 year with revenue of $3.78 billion and year-end per share earnings of 7 cents, with fourth-quarter revenue reaching another record high of $982 million -- a jump of 10% from the same quarter last year.

On the debt front, SIRI's cost of debt has sunk like a stone, as the company shaved off approximately $150 million of annual interest charges from its P/L, as the company retired during the current quarter old higher-yielding notes and negotiated new notes with much-lower yields.

David Frear, Sirius' chief financial officer, stated in the third-quarter conference call:

It was another great quarter, from a balance sheet perspective. We tapped the market at opportune times in August and September, raising $1.2 billion in seven and eight year notes to retire our 8.75% notes and 7.625% notes. In the last 15 months, we have effectively refinanced the entire balance sheet, pushing out maturities, easing or eliminating covenant restrictions and lowering the average cost of our debt from 9.2% to just 5.5%.

And there's a lot more to the good news, including Sirius' potential to expand its presence with used-car owners, which includes a total of 1.5 million (7.2% of 20.7 million total self-pay subscriptions) self-pay subscribers expected by year-end.

Introduced through only 103 used car dealers at the end of Q1 2011, Sirius' used-car program includes a 90-day trial of programming from its OEM satellite equipped radio. Today with more than 10,500 dealers within the network, CEO Jim Mayer expects self-pays from used car purchases to continue growing, presumably (not expounded upon in the latest conference call of Oct. 24) from deeper market penetration of the approximately 122,000 used car dealers (IBIS World statistics) in the United States.

With the seeds planted for higher revenue through long-term contracts with auto makers (and used car dealers) resulting, so far, to better operating margins, cash flow and profitability, Sirius' stock has attracted a lot of investors who have pushed the stock price up to rather lofty levels, in my opinion.

Below, find a sample list of SIRI's valuation metrics, according to Yahoo! Finance :

Trailing P/E: 49.86
Forward P/E (Dec. 31 2014): 30.33
PEG ratio (5-year expected): 1.82
Price to Sales: 6.03
Price to book: 7.86

All of the five valuation metrics above, which I use as a starting point to further analysis, show a richly priced stock. The PEG ratio, especially, is quite high, and implies a stock growing nearly twice as fast as earnings. Rhetorically speaking, are investors expecting a doubling of Sirius' 6.54% profit margin? Maybe.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SIRI $3.86 0.78%
AAPL $124.24 0.70%
FB $83.01 0.11%
GOOG $555.17 -0.65%
TSLA $190.40 -2.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs