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Yahoo
6 days ago
- Business
- Yahoo
Sirius XM Stock Looks Cheap -- or Does It?
Key Points Sirius XM generates strong free cash flow. Subscriber growth has stalled, and digital expansion through Pandora remains a work in progress. The stock's long-term returns hinge on whether Sirius can find a growth catalyst. 10 stocks we like better than Sirius XM › Sirius XM (NASDAQ: SIRI) is one of the most polarizing stocks in the media space. On paper, it appears to be a classic value play: a sticky subscription business, substantial free cash flow, generous buybacks, and a solid dividend. Yet the market isn't buying it -- shares are down 34% in the last 12 months (as of writing), and sentiment remains firmly negative. So what's going on? Is Sirius XM genuinely undervalued -- or is it cheap for a reason? Let's break it down. The bull case: A cash cow with recurring revenue Sirius XM's biggest strength is its predictable revenue stream. In 2024, 76% of its $8.7 billion in revenue comes from subscriptions, providing a predictable cash flow. That year, free cash flow was $1 billion. That kind of recurring, high-margin revenue is increasingly hard to find in a media landscape dominated by ad-dependent business models. While not the sexiest, Sirius XM's core satellite radio business remains sticky among car owners, who often auto-subscribe after buying a new or used vehicle. This captive audience has enabled Sirius to maintain churn rates under 2% over the last five years, reflecting the strength of its business model. Meanwhile, Sirius has returned nearly $7.5 billion to shareholders over the past seven years through share buybacks, reducing a substantial portion of the share float. Moreover, it has consistently paid dividends over the last decade, further rewarding shareholders. Its investor-friendly capital allocation strategy may have explained Berkshire Hathaway's massive stake in the company. So, for value investors, the setup is appealing: a high-cash-flow business, ongoing share buybacks, and a management team committed to paying dividends. The bear case: Growth is negative Despite all the positive factors mentioned, Sirius XM has not garnered much investor support. For perspective, the stock trades recently at a price-to-free-cash-flow (P/FCF) ratio of 7.3 times, which was down around 50% over the last five years. So what's the problem? The primary reason is that the company has struggled to grow in recent years. In fact, revenue declined in the last two years, down from $9 billion to $8.7 billion. While the magnitude of the decline has been modest, it highlights the challenge the media company has in transitioning its business model. For instance, paid subscribers peaked at 34.9 million in 2019 and have since slowly declined to 33.2 million as of 2024. While the broader audio space is booming (just look at Spotify's podcast pivot or YouTube's recent success), Sirius has yet to find its niche, even after acquiring Pandora. So far, the streaming and podcast business still hasn't lived up to expectations. Its revenue has remained roughly flat at around $2 billion over the last four years, while monthly active users have been declining during this period. In other words, Sirius XM is stuck between two worlds: a legacy satellite business with limited growth potential, and a digital platform that's struggling to compete. More importantly, without a compelling growth story, even a "cheap" multiple can be misleading. Valuations tend to compress -- and stay compressed -- when the market sees a declining business. Is the stock a bargain or not? It depends. If investors believe Sirius XM can stabilize its subscriber base, extract more value from Pandora, and maintain strong free cash flow, then the stock could offer solid returns through dividends and buybacks alone. Furthermore, the company is experimenting with new ways of monetization, which include its low-priced ad-supported subscription service, and is also working hard to turn around its podcast business by steering it beyond its legacy car user cohort. If these initiatives become just mildly successful, then today's valuation may look like a gift. On the other hand, there's a possibility that the current decline in revenue and subscriber base proves to be structural, and that the company fails to transition itself to a new sustainable business model. In this context, the stock's low valuation isn't a bargain, but rather a reflection of the market pricing in a structural decline. Worse, these failed "value stocks" often remain cheap or become cheaper. What does it mean for investors? Sirius XM shares appears cheap -- but only if the company can halt its revenue decline and sustain its cash flow. Without growth, it's hard to see meaningful upside. Investors seeking a stable, cash-generating business may find value in this opportunity. Just don't expect this stock to race ahead anytime soon. Should you invest $1,000 in Sirius XM right now? Before you buy stock in Sirius XM, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Sirius XM wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Spotify Technology. The Motley Fool has a disclosure policy. Sirius XM Stock Looks Cheap -- or Does It? was originally published by The Motley Fool
Yahoo
04-08-2025
- Business
- Yahoo
Joint Stock Company Kaspi.kz (KSPI): A Bull Case Theory
We came across a bullish thesis on Joint Stock Company on Peter's Substack by Peter Thomason. In this article, we will summarize the bulls' thesis on KSPI. Joint Stock Company share was trading at $85.00 as of July 25th. KSPI's trailing P/E was 8.21 according to Yahoo Finance. Photo by Clay Banks on Unsplash Kaspi (KSPI), the first Kazakh company to list on U.S. exchanges, is described as one of the most asymmetrical opportunities among large caps, offering a rare value play in a market priced for perfection. Originally a troubled Kazakh bank, Kaspi transformed under CEO Mikheil Lomtadze and Chairman Vyacheslav Kim into a dominant 'super app,' combining services akin to Amazon, Visa, Venmo, and more. It now commands 95%+ monthly usage among Kazakhstan's adults, with customer engagement and economic value per user compounding over time. The business rests on a capital-light, highly profitable model, delivering 30%+ annual revenue growth, profit margins of 37–48%, and extraordinary returns on equity of 54–96%, while maintaining conservative leverage. Management, with 40% ownership, is deeply aligned with shareholders and has a long history of prioritizing customer trust — from staying open during the 2014 currency crisis to closing profitable services that didn't meet customer satisfaction standards. Kaspi's radical customer obsession drives network effects and resilience, creating a durable moat and sticky user base. Expansion into Turkey provides upside optionality, but the investment case does not rely on it; the core Kazakhstan operations alone could grow earnings 2–4x through increased value per user and scaling of newer services like e-grocery and food delivery. Trading at just 7.7x trailing and 6.8x forward earnings with a PEG ratio of 0.5, Kaspi is priced for negative growth despite consistent execution and a culture of integrity, presenting an exceptional long-term opportunity with significant potential rerating for patient investors. Previously, we covered a on Joint Stock Company (KSPI) by Antoni Nabzdyk in May 2025, highlighting its dominant super app ecosystem, sticky engagement, and asymmetric upside despite geopolitical risks. The stock has depreciated about 6% since then due to market weakness, but the thesis holds. Peter Thomason shares a similar view, emphasizing Kaspi's exceptional returns, network effects, and Turkey expansion optionality. Joint Stock Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held KSPI at the end of the first quarter which was 27 in the previous quarter. While we acknowledge the potential of KSPI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
