SiriusXM (SIRI): Fresh Satellite Powers Broader Reach—How Does Its Valuation Stack Up?

Sirius XM Holdings (SIRI) has activated its brand-new SXM-10 satellite, confirming after weeks of orbital testing that the satellite is now live and part of its active fleet. This upgrade is considered significant. With SXM-10 now operational, Sirius XM can broadcast its programming more broadly across approximately 175 million equipped vehicles nationwide, aided by advanced hardware such as a large S-band reflector antenna. This development follows the debut of SXM-9 earlier this year and underscores Sirius XM’s continued investment in its space infrastructure, with additional satellite launches planned over the next two years. The company’s latest move comes during a period of mixed share performance. Sirius XM has reported a 9% gain over the past three months and is up roughly 7% for the year; however, the longer-term trend remains less positive, as the stock is still down 25% over the past year with negative returns accumulating since 2020. Revenue growth remains essentially flat, but net income has increased over the last year, making the recent price movements noteworthy as the business evolves. As Sirius XM invests further in technical upgrades and the renewal of its satellite fleet, some investors may be considering whether momentum is building. After a challenging year for shareholders, the key question is whether Sirius XM represents a potential value opportunity, or if recent optimism is already reflected in the current share price.

Most Popular Narrative: 52.7% Undervalued

According to the narrative by ValueMan, Sirius XM Holdings may be trading far below its estimated fair value and could present a significant upside for investors.

Just think to yourself, "Let's build a satellite, send it to space, and maintain it." Their debt is a cost of operation, which by the way is, on average per year, a good ratio to their operating income. Everything that is leftover is given to shareholders. They keep no capital and have the shareholders completely in mind. Also, their telecommunication assets are worth a lot of money. If they were to fail as a company, major telecommunications firms could easily buy this company for its assets. Evaluate their competitive advantage!

Want to see what’s fueling this bold estimate for Sirius XM? The foundation of the story is a dramatic profit turnaround, reliance on unique industry advantages, and a future multiple that signals strong breakout potential. Which surprising financial levers did ValueMan use in their forecast model? Click in to uncover the hidden mechanics of this high-conviction fair value assessment.

Result: Fair Value of $50.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still notable risks, such as heightened competition from streaming or an unexpected downturn in auto sales, that could challenge Sirius XM’s outlook.

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

Another View

A different approach uses the SWS DCF model, which also points to the stock being undervalued based on its fundamentals. However, are these projections too optimistic, or is there more potential for upside than skeptics believe?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Sirius XM Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Sirius XM Holdings Narrative

If you have a different perspective or want to dive deeper into your own analysis, you can craft a unique narrative for Sirius XM in just a few minutes: Do it your way.

A great starting point for your Sirius XM Holdings research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Standout Investment Opportunities?

Make the most of your next move by checking out tailored investing ideas, each powered by the Simply Wall Street Screener. If you want to stay ahead, you should be reviewing these fresh possibilities before everyone else does.

• Capitalize on overlooked value by targeting companies trading well below their true worth in our list of undervalued stocks based on cash flows.
• Ride the wave of healthcare innovation and pinpoint promising breakthroughs among tomorrow’s leaders in healthcare AI stocks.
• Boost your portfolio’s income potential by finding steady plays offering yields above 3% with our selection of dividend stocks with yields > 3%.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com