What Does Howard Stern’s New SiriusXM Deal Mean for the Stock’s 2025 Valuation?

If you have been staring at the chart for Sirius XM Holdings and wondering what to do next, you are not alone. The company’s shares haven’t exactly been music to investors’ ears lately, with the price closing at $21.8 and notching losses across almost every time frame. The stock is down 4.5% over the past week, 6.4% over the last month, and has even extended to a 15.7% slide for the past year. The pain is even more apparent when you zoom out, as the 3- and 5-year returns are both underwater by over 55%.

So what gives? A lot of buzz, or drama depending on your perspective, has swirled around the company’s most famous voice, Howard Stern. For a brief moment this summer, there were rumors circulating about his show being canceled after a 20-year run. However, Stern himself quickly responded, saying he is “very happy at Sirius,” and with a fresh multi-year contract now in place, some of the existential worries about the platform have eased. That alone may shift investors’ risk perceptions and help steady the ship moving forward.

Of course, when the stock has been this weak, valuation starts to look more and more important. Right now, Sirius XM scores a 5 out of 6 on our undervaluation checklist. That is five green flags for potential value-seekers. Next, we will break down exactly which valuation methods give Sirius XM high marks, and at the end, introduce a perspective that may be even stronger than the sum of its parts.

Why Sirius XM Holdings is lagging behind its peers

Approach 1: Sirius XM Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting those back to today's dollars. This approach helps investors understand what a business is fundamentally worth, based on its ability to generate cash for shareholders over time.

For Sirius XM Holdings, the current Free Cash Flow stands at $1.15 Billion. Analyst forecasts cover up to five years, predicting steady growth, with cash flow expected to reach approximately $1.55 Billion by 2029. Beyond that, projections are extrapolated and suggest continued moderate increases out to 2035.

This two-stage Free Cash Flow to Equity model calculates an intrinsic value of $66.33 per share. Given the recent closing price of $21.80, the DCF model implies that Sirius XM stock is trading at a dramatic 67.1% discount to its estimated fair value. In other words, the shares appear meaningfully undervalued based on their fundamental cash generation prospects.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Sirius XM Holdings.

Our Discounted Cash Flow (DCF) analysis suggests Sirius XM Holdings is undervalued by 67.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Sirius XM Holdings Price vs Sales

For profitable companies like Sirius XM Holdings, the Price-to-Sales (P/S) ratio is a widely used valuation metric. The P/S ratio reflects how much investors are willing to pay for each dollar of a company's sales. It is particularly useful in the media industry because traditional earnings figures can be affected by non-cash expenses or one-off charges. This allows investors to compare companies with varying margins and growth profiles on a more consistent footing.

Growth expectations and risk profiles both help determine what a "normal" or "fair" multiple should be. Higher expected growth or lower business risks typically support higher P/S ratios, while slower-growing or riskier firms may warrant lower ones. At present, Sirius XM is trading at a P/S ratio of 0.86x, which is lower than both the industry average of 1.05x and the average for its peer group at 4.44x.

To provide a more tailored benchmark, Simply Wall St's proprietary "Fair Ratio" estimates what multiple would be reasonable by factoring in Sirius XM’s sales growth, risks, profit margin, industry, and size. Unlike traditional comparisons to peers and industry averages, the Fair Ratio is customized to the company's specific profile and may offer a more reliable guide. For Sirius XM, the Fair Ratio is calculated at 1.37x.

Because Sirius XM’s current P/S ratio is significantly below its Fair Ratio, the stock appears undervalued by this measure. This may indicate potential value for investors seeking a margin of safety.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Sirius XM Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives.

A Narrative is your way to connect the dots between your personal take on a company’s story and the financial future you expect for it. Essentially, it is the story you believe explains where a company is headed, linked directly to your assumptions for revenue, earnings, and margins.

Unlike classic valuation models that just crunch numbers, Narratives let you set your own outlook, map that to specific forecasts, and instantly see a fair value for the stock based on what you believe will happen next.

On Simply Wall St’s Community page, millions of investors can build, share, and explore Narratives. It is as easy as a few clicks, and each one automatically updates as new earnings, news, or events are released, so your thesis always stays current.

This means you can quickly spot if your view shows Sirius XM Holdings as overvalued or undervalued compared to its current price, making it much simpler to decide on your investment approach.

For example, some investors are optimistic, estimating a fair value as high as $50 per share if they believe the company’s moat, assets, and steady cash flow will keep paying off, while others see risks that put fair value closer to just $18. This highlights how Narratives capture both data and conviction in every investment decision.

Do you think there's more to the story for Sirius XM Holdings? Create your own Narrative to let the Community know!

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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