Sirius XM Radio Inc (SIRI): What’s Driving The Company’s Earnings?

Sirius XM Radio Inc (NASDAQ:SIRI)Next Tuesday, Sirius XM Radio Inc (NASDAQ:SIRI) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Sirius inspires strong reactions from investors, as its impressive recovery from near-oblivion during the financial crisis has brought its stock back up to pre-financial-crisis levels. But will the company ever produce the truly explosive growth it will need if it wants to see its stock regain levels last seen during the tech boom more than a decade ago? Let’s take an early look at what’s been happening with Sirius XM Radio Inc (NASDAQ:SIRI) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Sirius XM Radio

Analyst EPS Estimate $0.03
Change From Year-Ago EPS 50%
Revenue Estimate $906 million
Change From Year-Ago Revenue 12.6%
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

Will Sirius XM Radio deliver earnings growth this quarter?
Analysts have stayed confident in their calls for Sirius XM Radio Inc (NASDAQ:SIRI)’s earnings over the past quarter, keeping their $0.03 per share estimate unchanged in recent months. But they’ve dropped their consensus for full-year 2013 earnings by $0.01 per share, and that has kept the stock roughly unchanged since mid-January.

Sirius XM Radio Inc (NASDAQ:SIRI) can point to positive trends that should support earnings this quarter. Auto sales have been extremely strong and, given the importance that the auto industry has for pre-installed satellite-radio sales, good performance from automakers often translates to positive results for Sirius.

But some investors have been concerned about slowing growth. Early in the year, Sirius projected just 1.4 million net subscriber additions for 2013 and, although the company has been conservative with past projections, that figure is well below the 2 million additions last year. Although Sirius has dominant market share in providing satellite radio for automobiles, some believe that Pandora Media Inc (NYSE:P), Spotify, and other competitors will eventually eat into that dominance, as wireless Internet access becomes more available in vehicles.