Will Rising Costs Hurt SIRIUS XM (SIRI) In Q3 Earnings?
Zacks Investment Research | Oct 23, 2017 08:54AM ET
Sirius XM Holdings (NASDAQ:SIRI) is scheduled to report third-quarter 2017 results on Oct 25, before the market opens.
Last quarter, the company’s earnings were in line with the Zacks Consensus Estimate, while revenues beat the same. Both earnings and revenues improved on a year-over-year basis.
Let’s see how things shape up for this announcement.
Factors Likely at Play
Sirius XM’s bottom line in the third quarter is likely to be affected by a spike in costs. Also, the company completed the $480 million Pandora (NYSE:P) investment in the third quarter. This is likely to further pressurize the bottom line.
The slowdown in subscription growth may also hurt results in the third quarter. The company added 0.70 million subscriptions in the first half of 2017, significantly below the number, added a year ago.
The company’s high-debt levels are another cause for concern. Increased leverage coupled with stiff competition from rivals may also act as headwinds for the company in the third quarter.
However, the company’s efforts to reward shareholders with dividends and buybacks are impressive.
Earnings Whispers
Our proven model shows that Las Vegas Sands has the right combination of the two key ingredients — a positive Earnings ESP Filter .
Zacks Rank: Though the company’s positive ESP increases confidence about an earnings surprise, its Zacks Rank #4 (Sell) leaves surprise prediction inconclusive.
Hence, we caution against all Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
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