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Sirius XM Radio Inc (SIRI): Should You Still Invest?

Everything and everyone has a story. Although it may be true that some stories are unarguably more grand and exciting than others, no thing or person is without their own unique story. One exciting thing about the business world is that corporations are no exception to this rule. Each and every company in existence—past, present, or future—has had or will have its own story. Many of those stories are evolving and taking shape as you read this post.
Some six months ago, I posted a general analysis of the financial narrative within the Sirius Story, but given the ever-changing nature of corporations and their financial performance, an update to my first synopsis is now called for.  As I did previously, I’ll first highlight a few plots within the financial narratives of Sirius XM Radio Inc (NASDAQ:SIRI) and its competitors, Pandora Media Inc (NYSE:P) and Cumulus Media Inc (NASDAQ:CMLS). Specifically, I’ll take a look at the change in each company’s revenue growth and gross margins to see how successful the companies have been at not only generating revenue, but also at managing the corresponding costs to do so. I’ll also look at the change in each company’s debt to equity ratio to see how financially stable they are, and the change in their return on equity to see if they’re adding value to shareholders. Lastly, I’ll look at the change in their price to earnings and price to free cash flow ratios to see how well they’re priced.
Rev. Growth (5 Yr. Avg.)*
29.78% to 27.27%
13.70% to 24.50%
-4.82% to 9.22%
Gross Margin (5 Yr. Avg.)*
56.80% to 59.70%
37.30% to 38.50%
48.50% to 52.70%
Debt to Equity (MRQ)*
0.63 to 0.60
0.00 (no change)
10.04 to 10.64
Return on Equity (TTM)**
151.61% to 146.41%
-33.41% to -37.49%
97.13% to -25.51%
Price/Earnings (TTM)*
4.90 to 5.90
118.20 to 7.50
Price/Free Cash Flow (TTM)*
26.40 to 51.50
-110.70 to -291.50
-0.20 to 3.60
30.00 (no change)
*Data obtained from
**Data obtained from

The Sirius Story

As you can see from the above chart, the Sirius story (or at least the financial performance chapter) has lost some of its appeal.
Sirius XM Radio Inc (NASDAQ:SIRI)To begin with, Sirius XM Radio Inc (NASDAQ:SIRI) managed to fall off a bit with its previously dominant five-year average revenue growth performance.  Although still impressive, the fall is alarming when you consider that Cumulus Media Inc (NASDAQ:CMLS) nearly doubled its five-year average.  Sirius continues to impress within the gross margin and debt to equity arena, but is it enough to warrant your attention?  Even though Sirius XM Radio Inc (NASDAQ:SIRI) slipped and dropped off slightly with its (still great) trailing twelve month return on equity, its P/E ratio increased.  While only a small increase in P/E, the Sirius P/FCF ratio drastically increased by a staggering 95%. In other words, the Sirius XM Radio Inc (NASDAQ:SIRI) investment is getting more expensive, while its financial performance is getting more questionable.

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