Sirius XM Holdings Inc (SIRI, Financial) saw a notable 6.64% increase in its stock price following the release of its fourth-quarter and full-year 2024 results. This positive movement was driven by the company's strong performance, exceeding expectations in both revenue and earnings.
The recent earnings report revealed that Sirius XM added 149,000 self-paying subscribers in the fourth quarter, highlighting its growth despite a year-over-year decline in the total self-pay subscriber base. The firm's robust subscriber addition and successful cost-saving initiatives, targeting $200 million in annual savings by the end of 2025, further bolstered investor confidence.
Financially, Sirius XM is making significant strides. The company experienced a 28% year-over-year increase in free cash flow in the fourth quarter, alongside strong growth in programmatic podcast ad revenue in 2024. These factors contributed to the uptick in stock performance.
In terms of valuation, Sirius XM reaffirmed its 2025 guidance, projecting $8.5 billion in revenue and $1.15 billion in free cash flow. The stock currently trades at less than seven times its projected free cash flow, suggesting an attractive valuation. Additionally, Sirius XM has substantial backing from Berkshire Hathaway, holding a 35% stake in the company.
From a valuation perspective, Sirius XM (SIRI, Financial) boasts a low price-to-book ratio of 0.73, close to a 10-year low, which might appeal to value investors. The stock’s GF Value, available for further insights here, suggests that the stock could be a potential value trap, advising caution to potential investors.
Despite the positive growth and valuation metrics, investors should be mindful of certain warning signs such as the company's declining operating margin and distressed Altman Z-score of 0.9, which indicates potential financial distress in the future. Overall, Sirius XM's stock presents an intriguing proposition for investors, blending both opportunity and risk.
