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We expect DISH Network Corporation. (DISH - Analyst Report), the second-largest satellite TV operator in the U.S., to beat expectations when it reports its first-quarter 2013 results before the market opens on May 9, 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 +1.89%. This is a meaningful and leading indicator of a likely positive earnings surprise.

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

The combination of DISH’s Zacks Rank #3 (Hold) and +1.89% ESP makes us confident of a positive earnings beat on May 9, 2013.

What is Driving the Better-Than-Expected Earnings?

We expect DISh to benefit from the launch of its nationwide satellite-based broadband service called “dishNET, which covers around 2 million people with a starting speed of 5 Mbps. Moreover, DISH has renewed its agreement with Frontier Communications, ViaSat and Charter Communications to provide broadband satellite service to its huge customer base in rural areas to download movies at a rapid speed. We believe that these initiatives will boost the company’s revenues apart from improving its churn rate.

The company’s policy of not raising its prices unlike its competitors will also help it to reduce its churn rate and ramp up customer growth in the future. However, DISH is facing fierce competition from telecom carriers, who are gaining market share from satellite TV operators by offering fiber-based TV and other high-speed broadband services to subscribers. Rising programming expenses also remain a near-term headwind for the company and could impact the company’s bottom line in the coming quarter. 

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:

United States Cellular Corporation (USM - Analyst Report) currently has an Earnings ESP of +450.00% and holds a Zacks Rank #3 (Hold).

Sprint-Nextel Corporation (S - Analyst Report) has an Earnings ESP of +6.45% and carries a Zacks Rank #3 (Hold).

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

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