Today we’re going to take a look at the well-established Sirius XM Holdings Inc (NASDAQ:SIRI). The company’s stock had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $5.3 to $5.76. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at SIRI’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for SIRI
What is SIRI worth?
According to my valuation model, the stock is currently overvalued by about 30%, trading at $5.3 compared to my intrinsic value of $4.07. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that SIRI’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of SIRI look like?
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. SIRI’s earnings over the next few years are expected to increase by 26.25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? SIRI’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SIRI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on SIRI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SIRI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.