Sirius XM Holdings (SIRI) is drawing attention once again after announcing the renewal of Howard Stern’s contract until 2028 and appointing a new CFO with a strong background in automotive and consumer finance. These strategic moves are part of the company’s ongoing turnaround plan.
Despite these developments, the stock has faced challenges, with a 1-year total shareholder return decline of 4.15% and a staggering 60.43% decrease over the last three years. However, a recent 4.35% increase in share price over the past week suggests a potential rebound for investors.
Sirius XM aims to achieve $1.5 billion in free cash flow by 2027 and currently trades at a discount relative to the average analyst price target. Investors are left to wonder whether this signifies a new opportunity or if the market has already begun factoring in future growth expectations.
The stock’s last closing price was $21.10, compared to a fair value estimate of $24.00, indicating it is undervalued at present. Sirius XM is positioned to benefit from the rapid growth in podcast advertising—reportedly up nearly 50% year-over-year—along with improvements in audio ad technology that could enhance overall advertising revenue and future earnings.
However, the company faces ongoing challenges such as declining subscription and advertising revenue, which, combined with a heavy dependence on auto sign-ups, may hinder its growth trajectory and complicate the current undervaluation narrative.
Moreover, while market analyses suggest Sirius XM Holdings is undervalued based on discounted cash flow (DCF) metrics, the earnings multiple presents a more cautious view. Currently, shares are trading at a P/E ratio of 7.2x, higher than its peers at 5.9x, but below the broader US media industry average of 14.2x. The disparity raises questions about whether the market is signaling a need for caution or if it views future earnings expectations as lacking.
For investors considering Sirius XM, it may be prudent to broaden their search for investment opportunities and explore the company’s revenue model and growth potential against the backdrop of the larger market.
As Sirius XM continues to navigate through its reset, the combination of strategic leadership and innovative initiatives in digital audio could pave the way for promising developments ahead, giving investors hope for a turnaround as the company works to reposition itself in the competitive audio landscape.