Updated Aug 18 at 11:35am ET.
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Sirius XM notified regulators of a change to its executive team or board of directors. These filings are required when a high-level leader leaves or a new one joins, as the people running the company have a direct impact on its strategy and how it spends its cash.
While the filing confirms a leadership shift, the long-term path for the business remains tied to how well it can keep car owners subscribed to its satellite service. For now, this is a routine part of corporate management and does not change our view on the stock's value.
Source: 8-K filing
Guggenheim raised its target from $34 to $35 while keeping a Buy rating. The move follows a second quarter where the company showed it can still grow its cash flow and keep churn, the rate at which customers cancel their subscriptions, at record lows. While the target increase is small, it reflects growing confidence that the company is managing its transition to digital streaming better than some feared. The stock currently trades below this target, suggesting the firm sees room for the price to rise as the business stabilizes.
Source: Guggenheim
Revenue rose 1 percent to about 2.16 billion dollars, slightly ahead of what analysts expected. While earnings per share of $0.70 were lower than the $0.78 analysts predicted, the real story was in the cash. Free cash flow, the money left over after paying for operations and equipment, surged 48 percent to 593 million dollars.
The company is doing a better job of keeping the customers it has. Self-pay churn, the rate at which people cancel their own subscriptions, hit a record low of 1.4 percent. This stability allowed management to raise its full-year goals for revenue and cash flow by 25 million dollars. For a company often viewed as a declining legacy business, these numbers show it remains a highly profitable cash machine even as it slowly shifts toward streaming.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company will pay a cash dividend of $0.27 per share on August 26. To receive it, you must be a shareholder of record by the end of the day on August 10. This is a routine payment that reflects the company's commitment to returning cash to shareholders. It is supported by the steady subscription revenue the business generates from its satellite radio platform.
Source: PRNewsWire
In a recent interview, CEO Jennifer Witz noted that the company is seeing better customer satisfaction and engagement. She also discussed the competitive landscape and a potential merger with iHeartMedia, a major radio and podcasting rival.
These comments suggest the company's efforts to modernize its platform are beginning to show results. For long-term owners, the focus on retention is key, as keeping existing satellite subscribers is the most efficient way for the company to fund its newer digital and advertising initiatives.
Source: CNBC Television
Analysts recently updated their views following the company's second-quarter earnings report. Most analysts, 19 of 32, rate the stock a buy, and the average target of $32 suggests a 13% gain from today's price.
The company has a mixed record of meeting analyst targets, but its revenue is growing steadily. It is a mature business where cash flow matters more than small quarterly surprises.
| Expectation | |
|---|---|
| EPS | $0.77 |
| Revenue | $2.16B |
