We have noted Sirius XM's positive performance during today's evening trading session, during which it logged a 2.0% outperformance of the S&P 500. At its current price of $4.88, the company is now trading in range of its average target price of $4.8, which calls into question its ability to keep moving higher. Analysts have given the Broadcasting stock target prices ranging from $3.5 to $7.0 dollars per share, with an average rating of hold.
The market sentiment on Sirius XM seems pessimistic because the proportion of shorted shares in its float is quite high at 31.4%. Each short position represents an investor's expectation and hope that the stock's price will reverse course and start declining.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
We can make inferences about the market sentiment surrounding Sirius XM by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 12.9%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
Overall, there is negative market sentiment on Sirius XM because its an analyst consensus of little upside potential, a hold rating, an unusually large proportion of its shares sold short, and a very small number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are SIRI's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cashflow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2023-02-02 | 1,976,000 | -411,000 | 2,387,000 | 0.04 |
| 2022-02-01 | 1,998,000 | -388,000 | 2,386,000 | 0.76 |
| 2021-02-02 | 2,018,000 | -350,000 | 2,368,000 | -0.5 |
| 2020-02-04 | 2,017,000 | -363,000 | 2,380,000 | n/a |
