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SIRIUS XM Radio Inc. (SIRI - Analyst Report) is all set to unveil its second-quarter 2012 results on Tuesday, August 7, 2012, before the opening bell. The current Zacks Consensus Estimate for the second quarter is pegged at 2 cents per share, representing an annualized decline of 37.04%.

With respect to earnings surprises, SIRIUS XM has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average earnings surprise of 133.33%.

First Quarter Recap

On May 1, 2012, SIRIUS XM reported its first-quarter 2012 financial results. Quarterly GAAP net income was $107.7 million or 2 cents per share against $78.2 million or 1 cent per share in the prior-year quarter. First-quarter 2012 earnings per share of 2 cents were exactly in line with the Zacks Consensus Estimate.

Quarterly total revenue of $804.7 million was an improvement of 11% year over year, beating the Zacks Consensus Estimate of $800 million  Operating income, in the reported quarter, was $199.2 million compared with $164.2 million in the year-ago quarter.

Agreement of Estimate Revisions

Over the last 30 days, none out of the 9 analysts covering the stock revised their EPS estimates for the second and third quarter of 2012.

For fiscal 2012, in the last 30 days, 3 out of the 9 analysts covering the stock, raised the EPS estimates while one analyst reduced the same. Likewise, for fiscal 2013, out of the 7 analysts covering the stock, 3 analysts increased the EPS estimates while none reduced them.

Magnitude of Estimate Revisions

For the second and the third quarter of 2012, over the last 30 days, the current Zacks Consensus Estimate was in line with the previous estimate of 2 cents, respectively for both. However, for fiscal 2012, the current Zacks Consensus Estimate was just a penny above the earlier estimate of 7 cents. Similarly, for fiscal 2013, the current Zacks Consensus Estimate was just a penny above the earlier estimate of 10 cents.

Earning Surprises

In the previous quarter, SIRIUS XM reported EPS of 2 cents, which surpassed the Zacks Consensus Estimate by just a penny. The current Zacks Consensus Estimates for the ongoing quarter and the upcoming quarter contain upside potential of 0.00%, respectively (essentially a proxy for future earning surprises). However, for fiscal 2012, the Zacks Consensus Estimate contains downside risk of 12.50% but for fiscal 2013, it contains a growth potential of 0.00%.

Our Recommendation

Despite higher programming costs and sluggish U.S. economic growth coupled with stiff competition from Pioneer System and other media players like Cumulus Media Inc. (CMLS - Snapshot Report), we expect the company to perform well based on increased programming line ups and improved ratings. We, thus maintain our Outperform recommendation

Currently, the company has a Zacks #3 Rank, implying a short-term Hold rating.

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