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We expect Satellite radio company, SIRIUS XM Radio Inc. (SIRI - Analyst Report), to beat expectations when it reports second-quarter 2013 results on Jul 25, 2013 before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that SIRIUS XM is likely to beat earnings because it has the right combination of two key ingredients:

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +50.00%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks #3 Rank (Hold): SIRIUS XM currently has a Zacks Rank #3. Note that stocks with Zacks Ranks of #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a significantly higher chance of beating earnings. 

The combination of SIRIUS XM’s Zacks Rank # 3 (Hold) and +50.00% ESP makes us very confident of a positive earnings beat on Jul 25, 2013.

What is Driving the Better-Than-Expected Earnings?

SIRIUS XM in its interim report has reported a net addition of 715,000 customers for the second quarter of 2013, registering a 15% annualized and a staggering 58% sequential growth. With the latest subscriber gain, SIRIUS XM has crossed the 25 million customer mark and has added 1.17 million subscribers in the first half of fiscal 2013.

Increased automobile sales and the continuous launch of innovative products have mainly contributed to such strong subscriber growth. This, in turn, is expected to boost SIRIUS XM’s top line.

Additionally, SIRIUS XM boasts a solid product portfolio and strong business relationships with the original equipment manufacturers. These have led the company to raise its 2013 fiscal outlook by 100,000 to 1.5 million.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that they have the right combination of elements to post an earnings beat this quarter are as follows:

Cablevision Systems Corporation (CVC - Analyst Report) currently has an Earnings ESP of +120.00% and holds a Zacks Rank #3 (Hold).

Leap Wireless International Inc. has Earnings ESP of +3.00% and carries a Zacks Rank #3 (Hold).

CBS Corporation (CBS - Analyst Report) has an Earnings ESP of +1.89% and carries a Zacks Rank #3 (Hold).

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