SIRI
Sirius XM Holdings Inc.
$26.31
Leveraged Infrastructure
80%
EV/EBITDA × Default Multiple
Mild
·
Conviction
Overvalued
Trading 14.9% above fair value
You pay
$26.31
Bear
$12.62
Fair
$22.90
Bull
$33.18
Bear
$12.62
-52.0%
EBITDA $2B × 6.6x − $10B debt
Fair
$22.90
-13.0%
EBITDA $2B × 8.2x − $10B debt
Bull
$33.18
+26.1%
EBITDA $2B × 9.9x − $10B debt
Adjust Assumptions
8.2x
Key Value Driver
EV/EBITDA multiple (8.2x) vs. 4.6× leverage
Implied Market Multiple
8.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (32 analysts)
$34.43
Divergence from AlphaVal
33%
Summary
At 8.2x EV/EBITDA on $2B EBITDA, enterprise value is $17B. After subtracting $10B net debt, equity value is $22.90 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.
Wall Street's average price target is $34.43 (from 32 analysts). Our estimate is 33% below the consensus -- consider that gap carefully.
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