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Sirius XM (SIRI) to Report Tuesday: What to Expect

Stocks in this article: SIRI

NEW YORK (TheStreet) -- Sirius XM (SIRI) is due to report fourth-quarter and full-year earnings at 8 a.m. EST Tuesday.

Earlier in the year, the world's largest radio broadcaster by revenue announced it had ended 2013 with 25.56 million subscribers, a total 1.66 million net subscriber additions over the 12 months and exceeding the company's raised guidance of 1.6 million net additions.

"SiriusXM had an outstanding 2013, and we expect to meet or exceed all other guidance we have provided for the year," said CEO Jim Meyer in a statement in early January. "Automotive distribution is hitting on all cylinders and an increasing number of households, at all income levels, are subscribing to SiriusXM."

For the year ended December, management expects revenue of around $3.77 billion and adjusted EBITDA of $1.14 billion. Analysts polled by Thomson Reuters forecast revenue of $3.78 billion and EBITDA of $1.16 billion.

"Our strong history of growth will continue in 2014, as we invest in new products and technologies, like our connected vehicle services business. Adjusted EBITDA growth will continue to exceed 20%, and free cash flow per share will grow even faster. We look forward to building on our progress and delivering enhanced value to our shareholders," said Meyer.

Over fiscal 2014, management expects revenue of more than $4 billion and adjusted EBITDA of around $1.38 billion, as well as 1.25 million net subscriber additions. Analysts expect revenue of $4.13 billion and EBITDA of $1.4 billion.

TheStreet Ratings team rates SIRIUS XM HOLDINGS INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate SIRIUS XM HOLDINGS INC (SIRI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SIRI's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $302.24 million or 37.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.65%.
  • The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 65.01%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.54% trails the industry average.
  • SIRIUS XM HOLDINGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SIRIUS XM HOLDINGS INC increased its bottom line by earning $0.53 versus $0.07 in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings ($0.07 versus $0.53).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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