Is There Now An Opportunity In The Liberty SiriusXM Group (NASDAQ:LSXM.K)?

Today we're going to take a look at the well-established The Liberty SiriusXM Group (NASDAQ:LSXM.K). The company's stock saw a significant share price rise of 31% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Liberty SiriusXM Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Liberty SiriusXM Group

Is Liberty SiriusXM Group Still Cheap?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Liberty SiriusXM Group’s ratio of 11.23x is trading slightly below its industry peers’ ratio of 13.27x, which means if you buy Liberty SiriusXM Group today, you’d be paying a reasonable price for it. And if you believe that Liberty SiriusXM Group should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Liberty SiriusXM Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 15% over the next couple of years, the outlook is positive for Liberty SiriusXM Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in LSXM.K’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LSXM.K? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on LSXM.K, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for LSXM.K, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Liberty SiriusXM Group at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Liberty SiriusXM Group.

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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.