Will Sirius XM Radio Keep Soaring in 2013?

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Sirius XM Radio (NASDAQ: SIRI  ) . The satellite-radio giant put up amazingly strong numbers in 2012 as it continued to pull in customers despite threats from streaming audio and other competitors. Can Sirius keep climbing in the year ahead? Read on for more about Sirius XM Radio's prospects for 2013.

Stats on Sirius XM Radio

Average Stock Target Price

$3.23

Full-Year 2012 EPS Estimate

$0.53*

Full-Year 2013 EPS Estimate

$0.10

Full-Year 2012 Sales Growth Estimate

13.2%

Full-Year 2013 Sales Growth Estimate

12%

Forward P/E

31.3

Source: Yahoo1 Finance.
*Includes one-time income-tax benefit.

Will Sirius XM stay connected in 2013?
Analysts aren't sure what to expect from Sirius XM this year. Although they expect continued revenue and earnings growth after adjusting for last year's income-tax benefit from recognizing more than $3 billion of net operating loss offsets, analysts don't think the stock has much upside, with a target price just 3% higher than the current share price.

Arguably the biggest question facing Sirius is whether it can keep growing its subscriber base at the same pace it did last year. A few days ago, the company released figures saying that it ended 2012 with 2 million net subscriber additions, well above the 1.3 million it projected last year. For 2013, the company expects 1.4 million added subscribers, with similarly conservative estimates for revenue, earnings, and free cash flow. Investors will want to see better numbers than that to keep the stock moving higher.

The other big uncertainty comes from Liberty Media's (NASDAQ: STRZA  ) stake in Sirius. With the media giant getting permission to take a majority stake in Sirius, Liberty Media is expected to spin off its Sirius stock to Liberty shareholders.

Meanwhile, Sirius is doing its best to stay in front of the trend toward streaming multimedia. So far, moves from Ford (NYSE: F  ) and Toyota (NYSE: TM  ) to offer audio entertainment options from Pandora (NYSE: P  ) , iHeartRadio, and other providers haven't dented Sirius subscriber counts, especially because carmakers are also providing factory-installed Sirius XM receivers on new models. It's in Ford's and Toyota's interest not to play favorites but rather to give all their customers everything they want, and Sirius continues to play a big part in those customer wishes.

With such strong share gains in 2012, expecting a big jump in 2013 may be too greedy. But Sirius XM's business prospects look bright for this year and beyond.

Will Sirius XM stay on top?
Sirius has been through tough times over the years, but it has picked itself up off the floor since its 2009 lows. Finding disruptive companies is a specialty of Motley Fool co-founder David Gardner, who has had substantial success in finding revolutionary stocks before Wall Street does. Learn more about how David discovers his winners; click here to get instant access to a personal tour of David's Supernova service.

Click here to add Sirius XM Radio to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 14, 2013, at 1:19 PM, CaptainDarryn wrote:

    A rookie question: If Liberty Media takes 51% of Sirius, does that "cancel" out the Sirius common stock? In other words, Do I need to sell my shares before Liberty takes control? Again, I am quite the rookie, I had some Six Flags stock a few years ago and was all excited when they came out of bankruptcy, however the next day the stock disappeared and I was stuck "holding the bag" as they say.

  • Report this Comment On January 16, 2013, at 9:04 AM, TMFGalagan wrote:

    @CaptainDarryn - No, it doesn't cancel anything. Taking majority stake isn't like a bankruptcy proceeding; your shares can't be cancelled just because Liberty takes a big stake.

    best,

    dan (TMF Galagan)

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2192752, ~/Articles/ArticleHandler.aspx, 11/27/2014 4:03:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement