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Will SIRIUS XM (SIRI) Surprise this Earnings Season?

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SIRIUS XM Holdings Inc. (SIRI) is set to release third-quarter 2015 results before the opening bell on Oct 22.

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

Factors at Play

Strong telematics partnerships with major car makers coupled with an improving U.S. auto industry have contributed significantly and are also expected to drive SIRIUS XM's top line going ahead. Moreover, renewal of broadcast contracts involving major sporting events and the launch of upgraded apps are likely to boost revenues further.

On the flip side, SIRIUS XM is highly dependent on the U.S. auto industry for growth.Therefore, even a minor fluctuation in autosales may significantly affect the company's financials. Moreover, stiff competition from other industry players coupled with continuous evolution of technology may dent the company's profits to a great extent.

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 (Strong Buy), #2 (Buy) or at least #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:The Most Accurate estimate and the Zacks Consensus Estimate are both poised at 3 cents. Hence, the ESP is 0.00%.

Zacks Rank: SIRIUS XM carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

T-Mobile US, Inc. TMUS has an earnings ESP of +3.13% and a Zacks Rank #2.

Facebook, Inc. FB has an earnings ESP of +5.71% and a Zacks Rank #3.

Time Warner Inc. TWX has an earnings ESP of +0.92% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TIME WARNER INC (TWX): Free Stock Analysis Report

SIRIUS XM HLDGS (SIRI): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

T-MOBILE US INC (TMUS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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