Sirius XM Holdings Inc. (NASDAQ:SIRI) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.2% to hit US$2.0b. Sirius XM Holdings reported statutory earnings per share (EPS) US$0.06, which was a notable 13% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the twelve analysts covering Sirius XM Holdings are now predicting revenues of US$8.27b in 2021. If met, this would reflect a credible 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 14% to US$0.27. Before this earnings report, the analysts had been forecasting revenues of US$8.18b and earnings per share (EPS) of US$0.27 in 2021. So the consensus seems to have become somewhat more optimistic on Sirius XM Holdings' earnings potential following these results.
There's been no major changes to the consensus price target of US$6.98, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Sirius XM Holdings, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$4.75 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Sirius XM Holdings' revenue growth is expected to slow, with forecast 4.6% increase next year well below the historical 12%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.7% next year. So it's pretty clear that, while Sirius XM Holdings' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sirius XM Holdings following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Sirius XM Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Sirius XM Holdings analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Sirius XM Holdings that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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