Sirius XM Holdings (SIRI) Extends Jeff Lewis Deal, Is The Stock Still A Bargain?

Sirius XM Holdings: Contract Extension Puts Content Back In Focus

Jeff Lewis’ new two year deal for “Jeff Lewis Live” at Sirius XM Holdings (SIRI) gives investors a fresh content headline to weigh against concerns about flat demand and softer cash generation.

The fresh content deal lands while Sirius XM Holdings trades at US$26.97, with the share price up 31.5% year to date but down 11.9% over three months. The 1 year total shareholder return of 31.9% contrasts with a 5 year total shareholder return that declined 46.3%, suggesting recent momentum has improved even as longer term holders still carry meaningful losses.

Scan beyond Sirius XM Holdings and evaluate other media players with resilient balance sheets and fundamentals in our handpicked list of solid balance sheet and fundamentals (25 results).

After a sharp rebound for Sirius XM Holdings but weak long term total returns, the harder question now is whether the current price still compensates you for the risks on cash generation and growth. The valuation work starts at that point.

Most Popular Narrative: 19% Undervalued

The most followed narrative on Sirius XM Holdings pegs fair value at $33.23, comfortably above the last close at $26.97. This puts all the attention on whether the cash flows and content strategy really justify that gap.

The main factor that has to go right is that Sirius XM Holdings successfully scales its broader digital audio advertising platform, including the YouTube audio partnership and podcasting, so that this side of the business becomes a meaningful earnings driver on top of a relatively slow-growing subscription base.

The current valuation implies the market is giving limited credit for Sirius XM Holdings’ cost efficiency program, free cash flow guidance increases, and the multi-billion dollar potential value of its mid-band satellite spectrum, which is why this narrative views the stock as undervalued and bullish.

See why 72 investors see Sirius XM Holdings as 19% undervalued.

Result: Fair Value of $33.23 (UNDERVALUED)

Still, the narrative wobbles if subscription and ad revenue keep slipping or if monetization of mid band spectrum delivers less value than current assumptions imply.

Find out about the key risks to this Sirius XM Holdings narrative.

Next Steps

Mixed messages on Sirius XM Holdings so far. If you want your view grounded in the same evidence, start by weighing its 3 key rewards and 3 important warning signs.

Looking For More Investment Ideas Beyond Sirius XM Holdings?

Do not stop your research at Sirius XM Holdings. Broaden your watchlist with fresh, data driven ideas that could suit very different investing goals and risk levels.

• Target potential mispricing by scanning companies that our tools flag as attractively valued relative to quality in the 33 high quality undervalued stocks.
• Strengthen your income stream by focusing on resilient payers with hefty yields through the 8 dividend fortresses.
• Dial down portfolio stress by concentrating on businesses that score well on balance sheet strength and risk in the 32 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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