Is The Liberty SiriusXM Group (NASDAQ:LSXM.K) Potentially Undervalued?

While The Liberty SiriusXM Group (NASDAQ:LSXM.K) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Liberty SiriusXM Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Liberty SiriusXM Group

What Is Liberty SiriusXM Group Worth?

Great news for investors – Liberty SiriusXM Group is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Liberty SiriusXM Group’s ratio of 8.18x is below its peer average of 14.3x, which indicates the stock is trading at a lower price compared to the Media industry. What’s more interesting is that, Liberty SiriusXM Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Liberty SiriusXM Group generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -9.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Liberty SiriusXM Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although LSXM.K is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LSXM.K, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on LSXM.K for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Liberty SiriusXM Group, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Liberty SiriusXM Group has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Liberty SiriusXM Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.