Every three months, companies hold conference calls and send out press releases detailing how well (or poorly) they did in the previous quarters. To most of us, a lot of this sounds like a barrage of numbers that don't seem to have much meaning, but shareholders, or prospective ones, should pay attention to a few specific details of each one.
I got to experience my first one on April 30 when SiriusXM released all of their nerdy details. I really got a feel for how well the company was doing when I compared their numbers from 2012. Although the numbers did fall just short of analysts expectations, everything appears up from last year. SIRI earned $897 million compared the estimated $903 million, and 2 cents per share compared to the expect 3 cents in Q1 2013. This increase in revenue from $805 million in the first quarter of 2012 is also reflected in the increase in net income, up to $124 million from $108 million last year. Obviously the company is growing, both in number of subscribers and how much the company is earning per subscriber, and that is reflected in these numbers.
Another big deal is that free cash flow increased from $15 million to $142 million. The reason this is a big deal for shareholders is that this allows the company to buyback more shares of stocks. I mentioned in a previous post how this increases demand for shares, which in turn increases the price of the stock, thus rewarding us for owning shares of the company. Many companies may choose to also release a dividend to shareholders, giving them an amount of cash directly per share. Earning per share for SIRI are not great enough, so nobody expects to receive a dividend from them anytime soon.
That was on Tuesday morning, and after its release, the price of the stock pre-market had fallen. I was expecting that, as I had noticed if a company only met expectations, a lot of people who had high hopes would sell off without giving the stock much chance. But did SIRI every have a surprise in store for me! All day Tuesday, the stock inched its way higher and higher, going from $3.07 (again, it was lower than that pre-market) to close all the way at $3.25. And the stock wasn't done there! The next day the stock peaked at $3.40 and closed at $3.35, greatly exceeding my own expectations of the stock for the week. The stock did come back to earth today, as it closed at $3.30. I can't be upset though, as the stock is now ahead of schedule in reach my goal of where I want to sell it.
RDN also released its earnings this week. I won't go into as much detail, but the stock has had a roller coaster of a week thus far, but closed on Thursday at $11.89 per share. I expect it to continue its march higher into the summer.
To date, SIRI is up 7.86% after fees, while RDN has earned me 14.71%. This brings my total earnings to 11.31%. I do realize I shouldn't expect to continue earning those kind of gains all the time, especially in less than 3 weeks. But it does make me feel good and more confident with the decisions I make regarding my money and investments.
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