The stock price of Sirius XM (NASDAQ:SIRI) has trended near its 52-week lows, but the company's financial performance remains robust. Sirius's shares have been trending downwards ever since the media conglomerate Liberty Media (NASDAQ:FWONA) put the brakes on its deal to fully acquire Sirius. But is this what investors should focus on?

Sirius is growing its subscriber count, generating substantial amounts of free cash flow, and repurchasing shares as well. The company's stock price will move higher in the future.

Earnings growth ahead 
In the last quarter, the company's total subscriber base increased 6% year-over-year to 25.83 million and total revenue increased 11% year-over-year to $998 million. With such healthy growth rates and an expected free cash flow of $1.1 billion for 2014, the company will be able to conduct a strong level of share buybacks which should drive earnings per share.

During 2013, Sirius XM Holdings repurchased 520.3 million of its shares at an aggregate cost of $1.76 billion at an average cost of $3.39 per share. The company had already repurchased another $420 million worth of its shares as of April 2014, which included a $340 million repurchase from its controlling shareholder Liberty Media. 

Such an aggressive share repurchase strategy will heavily reduce the company's diluted share count and lead to earnings-per-share growth. Looking forward a few years, buybacks as well as the company's scalable business model should lead to double-digit EPS growth.

Sirius also just issued more debt to fuel its leveraged share repurchases. The company raised another $1.5 billion in 6% senior notes due in 2024. More leverage in its capital structure is good for the company's equity holders, as the company has been growing its operating cash flow substantially and that will lead to a higher return on equity. 

Diversifying revenue
The company gets a large portion of its total revenue from monthly subscription fees from its users. In the last quarter, the average revenue per user, or ARPU, stood at $12.18 for a slight increase on a year-over-year basis from $12.05. Sirius earned 85.3% of its total revenue from subscription fees in the last quarter.

On a smaller note the company's revenue from its Canadian affiliate will also grow. Sirius XM owns 38% of Sirius XM Canada, which has 2.4 million subscribers. The company receives a 15% royalty for all subscriber fees earned by Sirius XM Canada each month and also receives an activation fee for Sirius XM Canada subscribers. 

The revenue mix of the company will also receive aid from the company's acquisition of the telematics services unit of Agero in 2013. Sirius's management estimated that this would result in revenue of roughly $100 million for this year and double-digit revenue growth for the next several years. This strategic movie into in-car services will enable the company to widen its revenue base and open the door to future opportunities. At the current level it provides roughly 10% of the company's total revenue. A more attractive revenue mix will provide diversification that will reduce the company's heavy reliance on subscription fees.

Going forward
Sirius's stock price has been range bound ever since Liberty Media changed its course to direct its attention to its other investments in the cable/media space. Liberty Media owns 53% of Sirius and can heavily influence the capital allocation strategies of Sirius XM, whether it's through buybacks or special dividends. 

Sirius XM has less than 26 million subscribers, and there are roughly 260 million vehicles in the U.S. The company still has a large addressable market in terms of adding more subscribers -- especially from the used-car market. Furthermore, the stable subscription revenues of Sirius provide a lot of downside protection for the company's financials while the company's long-standing relationships with auto-makers will aid the company to grow its subscriber base for many years as well.

Sirius trades at a reasonably priced forward P/E of 27 times. The current drop in Sirius's stock price offers solid returns for long-term investors.

Ishfaque Faruk owns shares of Liberty Media and Sirius XM Radio. The Motley Fool owns shares of Liberty Media and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.