NEW YORK (TheStreet) -- TheStreet Ratings team has reiterated its "buy" rating for SiriusXM Radio Inc (SIRI) with a score of B, pegging recent weakness in the stock as an opportunity for a bargain. During Thursday's trading, shares dropped 1.2% to $3.61, 12% lower than the year's high of $4.18 set on Oct. 22. So far, 70.8 million shares have changed hands, the day's third most actively traded stock after Twitter (TWTR) and Facebook (FB).
TheStreet Ratings Team has this to say about their recommendation:
"We rate Sirius XM Radio Inc (SIRI) a BUY. This is driven by multiple strengths, 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, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.4%. 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 -8.12%.
- The gross profit margin for Sirius XM Radio 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.
- Compared to its closing price of one year ago, SIRI's share price has jumped by 34.46%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Sirius XM Radio 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 Radio Inc increased its bottom line by earning 53 cents a share vs. 7 cents a share in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings (7 cents vs. 53 cents).
- You can view the full analysis from the report here: SIRI Ratings Report