While Warren Buffett is no longer the CEO of Berkshire Hathaway, its massive stock portfolio still has his fingerprints all over it.
That means if you're an investor hunting for value stock ideas, you don't have to do too much legwork -- you can just look at the conglomerate's portfolio for inspiration.
One such company within the portfolio that I think is well worth considering is Sirius XM Holdings (SIRI +3.03%), the satellite radio operator, of which Berkshire owns a 37% stake.
Image source: Getty Images.
Today, we'll look at the issues that have been weighing on its stock price, as well as why it may be considered a bargain now.
Why shares have dropped
Sirius XM's stock price has plummeted over the last five years due to a combination of related factors, including intense competition from streaming audio companies, a diminishing subscriber base, and declining revenue.
NASDAQ: SIRI
Key Data Points
Add that all together, and it points to Sirius XM needing to transform its image: It needs to stop behaving like it is (or should be) a high-growth company and start viewing itself as a more mature operator focused on a strong balance sheet.
That will also require investors to reset their expectations, which hasn't happened yet and is still an issue for the stock price.
For 2025, Sirius XM reported revenue of $8.5 billion, down 2% from 2024. It also lost 301,000 net subscribers.
The good news is that, for investors who understand Sirius XM's transformation, where it's trading now could be cheap compared to where it could be trading in the next few years.
Why Sirius XM is a potential bargain
What makes this company undervalued is its improving financial health in an increasingly uncertain economic environment.
Its revenue declined last year, but what appears to be getting overlooked is how it pulled itself out of a financial hole on the bottom line. In 2024, it reported a net loss of $2 billion, primarily due to a non-cash impairment charge of $3.3 billion. For 2025, it reported net income of $805 million.
Also, capital expenditures are expected to drop across both its satellite and non-satellite operations in the years ahead. That's another tailwind for Sirius XM, as it puts it in a position to grow its free cash flow.
Free cash flow is expected to reach around $1.3 billion in 2026 and $1.5 billion in 2027. That will provide it with a nice cushion to potentially make shareholder-friendly moves such as hiking its dividend or repurchasing shares.
Finding the value
The company's current forward price-to-earnings ratio of roughly 7.4 suggests the market doesn't see a lot of growth ahead for Sirius XM.
That's perfectly fine. Sirius XM can offer attributes that investors crave during times of increased uncertainty: reliability, profitability, and consistent income in the form of dividends. At the current share price, its payout yields a generous 4.8%.
Sirius XM may not have moonshot potential at this point, but it could certainly prove a profitable holding for forward-thinking investors once the broader market comes to recognize the company's value as a stable cash machine.
