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We expect Dish Network Corp. (DISH - Analyst Report), the second largest satellite TV operator in the U.S., to beat expectations when it reports its second-quarter 2013 results before the market opens on Aug 6, 2013.

Why a Likely Positive Surprise?

Our proven model shows that DISH 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, is +5.56%. This is a meaningful and leading indicator of a likely positive earnings surprise.

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

The combination of DISH’s Zacks Rank #3 (Hold) and +5.56% ESP makes us confident of a positive earnings beat on Aug 6, 2013.

What is Driving the Better-Than-Expected Earnings?

We believe that the stock is currently fairly valued as it has moved up more than 63% in the last year. In our view, better pay-TV services, dishNET satellite broadband services and strong customer faith will help the company to improve its financial condition. Moreover, the business fundamentals remain intriguing.

DISH Network is gradually improving its technically superior hardware, the latest of which is a HD DVR set. This new device will enable subscribers to automatically skip advertisements in prime time TV programs.

The FCC has allowed DISH Network to deploy a nationwide wireless network with some restrictive conditions. The company is striving to become a unique bundled service provider of wireless voice and data together with a state-of-the-art video distribution network. Management is yet to take the final decision regarding its wireless venture.  

Other Stocks to Consider

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

Cablevision Systems Corporation (CVC - Analyst Report) has Earnings ESP of +12.50% and carries a Zacks Rank #3 (Hold).

Liberty Interactive Corporation (LINTA - Analyst Report) has Earnings ESP of +3.70% and carries a Zacks Rank #3 (Hold).

Comcast Corporation (CMCSA - Analyst Report) has Earnings ESP of +1.67% and carries a Zacks Rank #2 (Buy).


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