With Subscriber Growth, SiriusXM Is a Good Buy On a Pullback

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Sirius XM Holdings Inc (NASDAQ:SIRI) is pretty much a household name at this point. For those who are unfamiliar, it provides satellite radio services in the United States and Canada. The company creates and broadcasts commercial-free music, sports talk and live events, comedy, news, exclusive talk and entertainment as well as traffic, weather, data, and information services for subscribers in cars, trucks, RVs, boats, and aircraft. It has various names the services operate under including SiriusXM Traffic, SiriusXM Travel Link, NavTraffic, NavWeather, SiriusXM Aviation, SiriusXM Marine, Sirius Marine Weather, XMWX Aviation, and XMWX Marine.

In addition, the company offers SiriusXM programming through the SiriusXM Internet Radio App for smartphones and other connected devices, as well as online at siriusxm.com. I have been a loyal subscriber, including of the app for the iPhone, for several years. I enjoy the service but recently decided to check back in with the stock as I have not analyzed it since it was trading around $2.50. Now the stock is just under $3.50 a share. In order for the shares to elevate further, the company needs to grow its earnings and revenue. An analysis of the company’s most recent quarter suggests that the stock may have some room to run.

In its most recent quarter SiriusXM saw revenue of $998 million, up 11 percent from the first quarter 2013 revenue of $897 million. Earnings per diluted share were $0.02 in both the first quarter of 2014 and 2013 so there was no year-over-year growth here unfortunately. The company saw net income of $94 million, adjusted for a non-recurring item associated with accounting for its Liberty Media stock repurchase agreement and purchase price accounting adjustments from the Sirius and XM merger, net of taxes, resulted in adjusted net income of $121 million, a 46 percent increase over $83 million in last year’s first quarter. Adjusted EBITDA for the first quarter of 2014 reached a record $335 million, up 28 percent from $262 million in the first quarter of 2013. Further the company’s adjusted EBITDA margin reached a record 33.5 percent in the first quarter of 2014.