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We expect Time Warner Inc. (TWX - Analyst Report), the diversified media conglomerate, to beat expectations when it reports second-quarter 2013 results on Aug 7, 2013.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Time Warner currently has an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +1.33%. This is because the Most Accurate Estimate stands at 76 cents, while the Zacks Consensus Estimate is pegged at 75 cents.   

Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks of #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 Time Warner’s Zacks Rank #3 (Hold) and +1.33% ESP makes us very confident regarding a positive earnings beat on Aug 7.

What is Driving the Better-than-Expected Earnings?     

Time Warner’s initiatives such as the foray into new markets, divestment activities, and digital endeavors would augur well for its future operating performances. Moreover, the company’s investments in programming, production and marketing, while concentrating on operating and capital efficiencies also bode well. The positive trend is seen in the trailing four-quarter average surprise of 5.6%.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

The Gap, Inc. (GPS - Analyst Report), Earnings ESP of +1.70% and a Zacks Rank #2 (Buy).

Citi Trends, Inc. (CTRN - Analyst Report), Earnings ESP of +2.33% and a Zacks Rank #2 (Buy).

New York & Company Inc. (NWY - Snapshot Report), Earnings ESP of +33.33% and a Zacks Rank #3 (Hold).

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