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We expect semiconductor company Intel Corp. (INTC - Analyst Report) to beat expectations when it reports second quarter 2013 results on Jul 17.

Why a Likely Positive Surprise?

Our proven model shows that Intel is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The 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 +2.56%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank#1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement. 

The combination of Intel’s Zacks Rank #3 (Hold) and a positive ESP of +2.56% makes us reasonably confident in looking for an earnings beat on Jul 17.

What is Driving the Better than Expected Earnings?

Intel’s new products, its strong position in emerging markets, solid execution, and cost control measures are expected to generate a positive earnings surprise in the upcoming quarter.

Additionally, Intel’s focus on the mobile segment, adoption of new products, growth in data centers and new offerings should help drive growth. Also, the company has increased its focus on the ultra-mobile, ultra-thin computing segment with its ultrabook concept. This has been welcomed by Hewlett Packard and Dell, among others, which is quite encouraging. The positive trend is seen in the trailing four-quarter average surprise of 6.44%.

Other Stocks to Consider

Intel is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies:

SanDisk Corp. (SNDK - Analyst Report), with an ESP of +4.55% and a Zacks Rank #1 (Strong Buy)

Syntel Inc. (SYNT - Snapshot Report), with an ESP of +3.81% and a Zacks Rank #1 (Strong Buy)

Scientific Games Corporation (SGMS - Analyst Report), with an ESP of +100.0% and a Zacks Rank #2 (Buy)

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