SIRI
Sirius XM Holdings Inc.
$30.75
Leveraged Infrastructure
80%
EV/EBITDA × Default Multiple
Moderate
·
Conviction
Overvalued
Trading 26.1% above fair value
You pay
$30.75
Bear
$13.43
Fair
$24.39
Bull
$35.35
Bear
$13.43
-56.3%
EBITDA $2B × 6.6x − $10B debt
Fair
$24.39
-20.7%
EBITDA $2B × 8.2x − $10B debt
Bull
$35.35
+15.0%
EBITDA $2B × 9.9x − $10B debt
Key Value Driver
EV/EBITDA multiple (8.2x) vs. 4.6× leverage
Implied Market Multiple
9.5x
Summary
Our base-case estimate uses EV/EBITDA × Default Multiple. We then blend that result with the average analyst price target of $27.80 from 32 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $24.39 per share.
Warnings
Debt is 4.6x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable