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We expect diversified fuel producer CONSOL Energy Inc. (CNX - Analyst Report) to beat expectations when it reports second quarter 2013 results before the market bell on Jul 25, 2013.

Why a Likely Positive Surprise?

Our proven model shows that CONSOL is likely to beat earnings because it has the right combination of two key ingredients. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read:Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen.

Positive Zacks ESP: ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +16.67%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

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

The combination of CONSOL’s Zacks Rank #3 (Hold) and +16.67% ESP makes us confident of a positive earnings beat on Jul 25th.

What is Driving the Better-Than-Expected Earnings?

CONSOL generates nearly 90% of its revenues from coal related operations. Though coal production in the second quarter declined 5.6% year over year to 13.8 million tons, a 4.9% year-over-year decline in total inventory pointed towards a positive movement in coal demand.

CONSOL Energy's Gas division produced 38.6 billion cubic feet equivalent (Bcfe) in the second quarter, up 3% from 37.3 Bcfe produced in the year-ago quarter.

Peabody Energy Corporation (BTU - Analyst Report) reported second quarter 2013 earnings of 33 cents per share, trumping the Zacks Consensus Estimate of a loss of 5 cents.

Other Stocks to Consider

CONSOL is not the only firm looking up this earnings season. We also see likely earnings beats coming from these two industry peers:

Alpha Natural Resources, Inc. (ANR - Snapshot Report) has earnings ESP of +1.67% and carries a Zacks Rank #3 (Hold).

Suncoke Energy Partners, L.P. (SXCP - Snapshot Report) has earnings ESP of +6.82% and carries a Zacks Rank #2 (Buy).

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