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Can SIRIUS XM Holdings (SIRI) Surprise this Earnings Season?

Zacks Equity Research

SIRIUS XM Holdings Inc. ( SIRI) is set to release its second-quarter 2014 results before the opening bell on Jul 29, 2014.


In the last quarter, the company delivered a negative 33.33% earnings surprise. Let’s see how things are shaping up for this announcement.


Factors to be Considered this Quarter


SIRIUS XM remains highly optimistic about its future growth prospects as most of its radios services are available in 26% of the cars in the U.S. This figure might improve at a faster pace with SIRIUS XM’s wireless-based telematics services. Moreover, a significant improvement in auto sales from Mar, 2014 will further bolster radio sales in the forthcoming quarters.


On the flip side, SIRIUS XM’s forthcoming top line growth is highly dependent on the future of the U.S. auto industry. Therefore, even a minor fluctuation in auto sales may significantly affect the company’s financials. Moreover, stiff competition from other industry players coupled with continuous change in technology may pose serious threats to the company’s profitability while moving ahead. 


Earnings Whispers 


Our proven model does not conclusively show that SIRIUS XM is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. Unfortunately, this is not the case here as elaborated below. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  


Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at 2 cents. Hence, the ESP is 0.00%.


Zacks Rank: SIRIUS XM’s Zacks Rank #2 (Buy) increases the predictive power of ESP. 


However, SIRIUS XM’s Zacks Rank #2 when combined with a 0.00% ESP lowers the possibility of an earnings surprise.


Other Stocks to Consider


Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.


Discovery Communications Inc. ( DISCA) has an Earnings ESP of +0.86% and a Zacks Rank #3 (Hold).


Facebook, Inc. ( FB) has an Earnings ESP of +3.45% and carries a Zacks Rank #2.


Nexstar Broadcasting Group, Inc. ( NXST) has an Earnings ESP of +6.25% and a Zacks Rank #3.

Read the Full Research Report on SIRI
Read the Full Research Report on DISCA
Read the Full Research Report on FB
Read the Full Research Report on NXST

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