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Sirius XM Holdings Inc. (SIRI - Analyst Report), one of the leading satellite radio companies in the U.S., is slated to report its fourth-quarter 2013 earnings on Feb 4, 2014, before the opening bell.

In the prior quarter, the company’s earnings came in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Factors to Influence This Quarter

The company reported 1.66 million subscriber additions in 2013, significantly exceeding its guidance of 1.60 million customers. Robust growth in subscribers is mainly attributed to increased automobile sales and the continuous launch of innovative products.

Liberty Media Corp. recently expressed its desire to take full control of Sirius XM Radio Inc., the largest satellite radio entertainment provider in the U.S. At present, Liberty Media holds approximately 53% of Sirius XM. The new proposal will give Liberty Media a 100% stake in Sirius XM.

The decision to acquire a 100% ownership in Sirius XM is viewed as Liberty Media’s attempt to consolidate its position in the U.S. cable TV industry. Liberty Media currently controls a 27.3% stake in Charter Communications Inc., the fourth largest pay-TV operator in the U.S.

Sirius XM is facing significant competition on several fronts. Pioneer System, a leading car information system manufacturer, recently unveiled a new car stereo called “AVIC-X920BT” that supports Internet radio. Such innovative product launches are also posing significant competitive threat to the company.

Earnings Whispers

Our proven model does not conclusively show that Sirius XM is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at $0.02. Hence, the ESP is 0.00%.

Zacks Rank #3 (Hold): Sirius XM’s Zacks Rank #3 complicates the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of 0.00% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.

Stocks to Consider

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

Starz (STRZA - Snapshot Report) with earnings ESP of +6.67% and Zacks Rank #2 (Buy).

Lions Gate Entertainment Corp. (LGF - Analyst Report) with earnings ESP of +14.55% and Zacks Rank #3.

Baidu, Inc. (BIDU - Snapshot Report) with earnings ESP of +6.34% and Zacks Rank #2 (Buy).

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