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.
In addition, Sirius XM Radio Inc (NASDAQ:SIRI) investors are trying to figure out the strategy that major shareholder Liberty Media Corp (NASDAQ:LMCA) has for its holdings in the company. Last month, Liberty bought a 27% stake in cable TV operator Charter Communications, Inc. (NASDAQ:CHTR), using capital that some Sirius investors had hoped Liberty would spend making a premium buyout offer for the remainder of the satellite radio company that it doesn’t own. So far, Liberty Media Corp (NASDAQ:LMCA) hasn’t committed either to a buyout or to a spinoff of its Sirius shares, seemingly content to keep its majority control.
In Sirius XM Radio Inc (NASDAQ:SIRI)’s report, watch closely to see if the company begins to ramp up its guidance for the full 2013 year. Last year, similarly conservative early estimates led to much higher actual results later on, and if the same trend holds true this year, then the stock could break out of its holding pattern sooner rather than later.
The article What’s Driving Sirius XM Radio’s Earnings? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.
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