Much is written about Sirius XM’s valuation, and unfortunately it is written by many that have a complete lack of understanding of the company’s fundamentals. I have previously established that Sirius XM trades historically between 17 and 25X EV/EBITDA. Some consider such a multiple to high, yet it is imperative that when deciding to go long or short for that matter, that one understands the basis of the valuation and multiple. I will now endeavor to show you exactly why Sirius XM enjoys a higher multiple, than other “similarly situated” companies.
One glaring fact about Sirius XM is that as the sole provider of Satellite Radio, which includes much more than just radio, there are no similarly situated companies. The most overlooked aspect of Sirius XM’s valuation and subsequent multiple, is hidden from most people, and is in the form of a decade of accumulated net operating losses (NOL’s).
Before we get into this further, I need to digress and explain the difference between a tax credit and a tax deduction. ...
39 Comments
I feeeel the poooowwweeerrrr!!!!!!
good…then stop letting people tell you the stock is over valued.
touche
Thank you for valuation lesson, it is appreciated as always!!
two thumbs up
NICE.
Explained it Beautifully.
Thank you Brandon.
Well written BM !
Brilliant analysis and summary, Brandon. It is definitely all about positioning and holding for the long term – which is certainly pointing to a big payoff for the reasons highlighted in the article above.
All these minor day to day movements in the share price mean absolutely nothing in the context of the bigger picture that lies ahead.
Stay the course – accumulating SIRI in the low 2′s is definitely a favorable risk/reward bet, as the projected upside potential greatly outweighs downside exposure through 2012 and beyond.
Let the day traders, manipulators, and puff pieces from the click clowns on SA continue to ply their trade; They all mean nothing against the bigger picture for Sirius XM’s expansion in value into the future.
All Systems Go for Sirius XM and SIRI – case closed.
I’m curious how much spectrum Sirius owns compared to AT&T or Dish. It’s money in the bank, yes, but how does it actually compare?
Good question, I have wondered the same as well…….how does that Spectrum compare in capacity to these others thus giving us a better idea of the value.
So, based on your calculations, it appears that the argument could be made that the company is actually trading at a lower multiple than everyone thinks it is.
Thanks for the analysis.
which is why I am better than they are.
AGREED!
Nice explanation B.
Great stuff. I was waiting to hear from you again on this after the news regarding AT&T last week. It seems like the spectrum might is just one more great thing SIRI has going for them not being discussed by the analysts. As usual
Thank you. I was just about to ask the question in the forum about all the assumptions that go into this scale.
Another great one Brandon, thanks!
Spencer is at it again – another bash article masquerading as a bullish stance.
Crazy. I posted on yahoo the other three recent articles discussing very good auto sales for January. He ignors those. Manipulative at its worst or just plain hack reporting.
Agreed, it is pretty easy to see through the masquerade.
Additionally, he blows Pandora harder than Rocco.
This article highlights more and more about the concept of INTRINSIC VALUE and lends further credence to my opinion that this stock is GREATLY UNDERVALUED and that we, as investors, need to think with clear heads about what we would accept as a value of our issue if and when an entity presents an offer for it.
OUTSTANDING BM; YOUR ANALYSIS IN THIS ARTICLE IS THOROUGH, THOUGHTFUL AND RIGHT AT THE HEART OF WHAT SIRI IS; A VALUE PLAY. THANK YOU!
BM, great range of knowledge and insight. Just how far does it reach? What’s your position on the ‘Big Bang Thoery’? On second thought, forget that, ther’s no money in that. Keep making us money in SIRI. WB would like this article.
I’ll answer that.
The bible says that in the beginning, the Lord said ” Let there be light!” ***************BANG**************** And there was…
FYI…the bible was written long before scientists figured out creation began with a big bang…
Is there any idea on what the total value would be of the spectrum on the open market?
Brandon: Based on your analysis what would would a reasonable average price per share of Siri be based on your valution or what range of price would you say Siri should be fair value?
thanks in advance
did that 4m trade that sent SIRI to 2.15 @ 10:40 EST today have any connection to this article? I wonder. Those of you with detail trade info maybe could look at the post time of the article and trade (and the broker who did the trade). Just wondering.
You never cease to amaze me BM, but then again anyone who has been one of your deciples the last three years as I have pretty much already knew this one though it is even that much more lucid. Sometimes it seems you put these eloquent info pieces out there so these anti SIRI tools will someday actually learn something…Sometimes I also wonder if these freaks can actually be that obtuse?! Are they simply writing these inane articles to get you pissed or are they actually that ill informed? Probably the latter…Thanks for everything!
Actually, I put them out there to empower you all to take the action.
Brandon, what ever happened to the concern a few months back that some wireless consortium was trying to get the spectrum adjacent to SiriusXM’s on the cheap from the govt.?
they did, and now they are selling it
Nice work! That is a pro – you made something hard look easy. Great read. Thank you
Thank you. You all know more now about SIRI than 99% of investors out there, based on this one article alone. Memorize it. Then when someone says siri is overvalued, educate them.
So, if one day Internet bandwidth becomes super cheap, they could sell their spectrum and have close to zero debt? I’m no expert like you BM, but this article sure helps me understand things much better. Thank you!
i think you meant super expensive,?
When I look at a stock I often look at company “book value” how does the spectrum figure into book value? is it a “mark to market” type of thing that varies or is it based upon acquisition cost?
the last time I checked, both spectrum values reflected the value at the time of initiation. Xm’s was much higher because of the merger, but siri’s remained at its initial cost…both are worth substantially more now and likely not reflected in siri’s true book value.
Thank you – You may have actually discussed this some time back and I couldn’t recall it. That should have a pretty dramatic effect on assets vs liabilities. Thanks again – great article.