Time for Sirius to Get Serious About Earnings

NEW YORK ( TheStreet) -- For some time now SiriusXM Radio ( SIRI) has been making promises on a wing and a prayer. Although they have had pretty good revenue growth, the long years of losses are hard to forgive.

Those that have held on with hope have seen the stock go from a low of just 5 cents back in February of 2009 to around the $2.70 mark it's trading at recently. Just look at the graph provided by Barchart comparing the growth in SIRI's price with the growth in the market as measured by the Value Line Index over the past three and a half years:

The company will be reporting earnings later this month and expectations are high. Analyst consensus estimates are between 1 cent and 3 cents per share and anything outside that range will cause rapid price movement.

SiriusXM provides satellite radio services in the U.S. and Canada. The company broadcasts approximately 135 channels, including music, sports, entertainment, comedy, talk, news, traffic, and weather channels on subscription fee basis through two satellite radio systems.

In addition, the company sells satellite radios and supplies, handles logistics and production of satellite and Internet radio systems and licenses its technology to various electronics manufacturers. As of Dec. 31, 2011, it had 21,892,824 subscribers. The company was formerly known as Sirius Satellite Radio Inc. and changed its name to Sirius XM Radio Inc. in August 2008. The company was founded in 1990 and is headquartered in New York, N.Y.

Factors to Consider

Technical indicators provided by Barchart: The stock had recent upward momentum and has earned a 100% Barchart technical buy signal as well as a Trend Spotter buy signal. The stock is trading above its 20-, 50- and 100-day moving averages and hit 10 new highs with a 6.52% price increase in the last month and 85.86% in the past 12 months.

The Relative Strength Index is 67.44% and the stock traded recently around 2.71 with a 50-day moving average of 2.45.

Fundamental factors: For a stock that has been trading below $3, the stock has a surprising following on Wall Street where 13 brokerage firms have assigned 15 analysts to make recommendations to their clients. Analysts project revenue growth of 12.20% this year and another 11.50% next year.

Earnings, or should I say losses, have recently turned the corner and are estimated to be up 685.70% this year, down 81.80% next year and increase by an annual rate of 25.20% over the next five years. The price-to-earnings ratio is 36.64 compared to the market P/E of 15.30 and the stock pays no dividend. In spite of its string of losses the stock still has a B+ financial strength rating.

Investor sentiment: Expectations are high and TheStreet gives the stock an A rating. Wall Street analysts have released four strong buy, six buy, four hold and one under perform reports to clients.

I look for individual investors' opinions on Motley Fool and 5,465 readers have given the stock an 82% vote of confidence to beat the market. Columnists Jim Cramer, Wayne Rogers and Tobin Smith were kind to the stock.

Conclusion: SiriusXM is a highly speculative stock that a lot of traders, both individual and professional are focused on. I think that expectations are high, maybe too high.

This stock is not for investors but may offer rewards for traders and speculators willing to take a risk. Anything less than a 2-cent earnings report will collapse this stock while above 3 cents might see the stock finally bust through the $3 range.

Watch the moving averages and 14-day turtle channels as the Oct. 30th earnings report date is reached. Be very careful on this one:

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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