3 issues you need to know about Sirius XM stock before you buy it

Company shares Sirius XM Holdings (NASDAQ: SIRI) have fallen about 59% in the past year and are currently trading at a 52-week low. The poor performance of satellite TV’s big trust for computer radio has raised concerns about whether the company can organize to turn the dial on legal improvement.

Even so, stock market volatility can occasionally save existing patrons with a compelling difference a piece of a solid company at a very affordable price sooner than a skill reversal. Is that the case with Sirius XM?

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Listed below are three things that you will undoubtedly trust to try to save your stock.

1. Sirius XM faces stiff competition

Sirius XM is trying to navigate an intelligent work climate where satellite TV has largely fallen out for computer radio. The company faces an uphill battle persuading unique listeners to accept its premium prices when the highway-related files cellular devices most users trust already have a variety of streaming audio that you’ll be willing to accept as real by choice.

Competition is no longer the easiest from platforms like it is Applied Sciences Spotifybut in addition, the song of the company from Apple and Amazon.

Sirius XM is speculating on more mainstream programming, podcasts, curated boom material and unique sports broadcasting as a differentiator that attracts listeners and adds pressure. Unfortunately, the trust properties leave a lot to be desired and help indicate why the company’s stock has performed so poorly. The company’s most frequent 33.2 million subscribers who pay for its core platform have seen a gradual decline in trust today; this figure was down about 2% from the previous year. The properties of Pandora’s smaller streaming segment and other off-platform companies weren’t much bigger, with active users down 6% year-over-year as of September 30.

Image credit: Getty Pictures.

2. The stock looks cheap, perhaps for an actual reason

When looking at Sirius XM as an investment, its compelling valuation comes into play. The stock is trading at less than 7 times Wall Street analysts’ average estimate for the company’s 2025 earnings per share (EPS) of $3.03 on a forward price-to-earnings (P/E) ratio of $3.03. While this rate represents a great bargain for the broader stock market, there may be a reason that more than one earnings per close is warranted given the company’s current weak point.

In December, Sirius XM adjusted its guidance for 2025, predicting a 1% decline in earnings when it follows the estimate for 2024. Similarly, the company’s goal of $1 billion in free cash this year is below its 2024 outlook. efficiency and cost-saving initiatives are a step on the real path, but what the market wants to perceive is a stronger improvement. Sirius XM’s cheap stock valuation may reflect underlying skepticism in the market that the company will continue to struggle to collect and sign up subscribers. There is more uncertainty about where the company is likely to be in three to five years.

3. The dividend is sustainable

On the plus side for patrons, Sirius XM stock is currently yielding 5.1% with its quarterly dividend of $0.27 per share. Feedback from the company’s custodial leadership reaffirmed the commitment to adjust the shareholder distribution to approximately $350 million in payout per year, which is more than covered by the traipse free money bolt.

Alternatively, it’s unclear whether that return is sufficient to buy into a solid opportunity, a valuable consideration for stability patrons. Buying a stock to collect an exorbitant dividend yield may seem like a no-brainer, but the yield can actually rise smoothly when the stock’s value falls further. Totally solid fundamentals seem adequate, but I wouldn’t put the stock on buy again on its own.

SIRI Files Dividend Yield YCharts

Final options

2025 is likely to be a tough year for Sirius XM to collect incentives that will no longer be neglected and help restore investor confidence. The market will likely be closely watching Sirius XM’s Q4 earnings release on January 30. In addition to the main financial numbers, the more valuable measures of overall performance are comparable to the different allowances of subscribers for the self-pay order and the average earnings per specific person. (ARPU) as a key measure of business momentum.

I predict the stock will remain volatile unless there is real evidence of more consistent successful upside. Aware of lingering uncertainty, patrons will be confident to steer clear of the stock for the time being and spot bigger alternatives in various places on the stock market.

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*Stock Guide returns data as of January 13, 2025

John Mackey, the defunct CEO of Whole Meals Market, an Amazon subsidiary, serves on the board of The Motley Idiot. Dan Victor has no share in any of the mentioned shares. Motley Idiot has positions and recommends technology from Amazon, Apple and Spotify. Motley Idiot has a revelation.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.