Continuing with the rivalry that every oligopoly sector provides, I will try and tackle the radio industry this update. However, while my other contests have been focused on the technical and fundamentals of each company, this update will be a little different as finding a winner will not be so rudimentary.
Looking at the radio giants of XM Satellite Radio (XMSR) and Sirius Satellite (SIRI), the positives and negatives are not as transparent as originally desired. Speaking in terms of fundamentals, it does seem like XM has the slight advantage. The company has the potential, according to Yahoo Finance, to grow over 25% over the next five years and grow almost 14% this year. Compared to Sirius’s potential growth of negative 28% this year and a growth only limited to 20% there might be an advantage to buy XM in the long run. However, what is interesting to note is that out of the last nine actions committed by financial institutions, XM has been downgraded six times, while during the last eight actions of Sirius, the company has been upgraded six times. Such statistics post a conundrum for investors with fundamentals spread all over. In terms of actual data, both companies have posted numbers surprising investors in a negative way. Three out the last four earning results, XM has failed to even meet earnings expectations illustrating a possible slowdown in terms of margins. Sirius did only slightly better only failing to meet expectations two out the last four reports. Margins for both in terms of revenue are both similar and adequate, but profit has been negative for over three years severely underlined by poor cash flow from operating margins and other areas. Therefore, the numbers for both companies may not be completely reflected over the power each contains in its industry, but do not provide any relief for investors looking to get into to one of these stocks.
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