DirecTV (NASDAQ:DTV) is scheduled to report its Q1 2011 earnings on May 5th. Here we take a look at key trends affecting DirecTV ahead of the earnings release – U.S. subscriber additions and growth in Latin America. DirecTV is the largest satellite pay TV provider in the U.S., ahead of its closest competitor Dish Network (NASDAQ:DISH). Its other competitors include cable service providers like Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) and telecoms like AT&T (NYSE:T) and Verizon (NYSE:VZ).

Our price estimate for DirecTV currently stands at $48.63, in line with market price.

U.S. Subscriber Additions Trends Always Critical

We estimate that about 85% of DirecTV’s stock value comes from its U.S. pay-TV business, which includes regular satellite TV packages, advanced services like HD and DVR and advertising revenue. So the company is highly sensitive to trends in the U.S. market.

DirecTV had a good last quarter (Q4 2010) in terms of net subscriber additions in the U.S., as it added about 289,000 net subscribers.^[1] Given the saturation of the U.S. pay-TV market, it will be interesting to see whether DirecTV’s subscriber growth will continue. Much also depends on how cable operators, who have been losing subscribers for a while, manage their customer base. We currently forecast slight U.S. pay-TV market share gains for DirecTV in 2011.

The Latin American Story – Eye Out for Capital Expenses

DirecTV’s Latin American business has been a mix of fast subscriber and revenue growth with high capital expenditures. While we have no reason to believe that subscriber (or revenue) growth will slow down in the near-term, we’ll be interested to hear management’s insight on the direction in which capital expenditures are headed. Currently, this division accounts for just 15% of DirecTV’s value by our estimates, but that could change quickly depending upon the company’s commitment to make continued investments in the region.

See our complete analysis for DirecTV stock here

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