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Salesforce.com Inc. (CRM - Analyst Report) is set to report second-quarter 2014 results after the closing bell on Aug 29. Last quarter, it posted a negative surprise of 600.0% with a trailing four-quarter average negative surprise of 244.4%. Let's see how things are shaping up for this announcement.

Factors to Consider this Past Quarter

Although Salesforce reported robust top-line growth in the first quarter, higher operating expenses negatively impacted the company’s bottom line.  However, the higher number of deal wins was encouraging and so were the geographical contributions. Overall, the company’s diverse cloud offerings and a better spending prospect projected by Gartner are encouraging.

Though the company is witnessing a rise in its expenses due to increased investments to offer innovative and diverse cloud-based offerings, we believe that these are essential for the company to gain traction in the cloud market and compete with some of the bellwethers in the cloud space.

Earnings Whispers?

Our proven model does not conclusively show that Salesforce will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: That is because the Most Accurate estimate stands at 5 cents loss per share while the Zacks Consensus Estimate is at 4 cents loss per share. That is a difference of -25.0%.

Zacks Rank #3 (Hold): Salesforce has a Zacks Rank #3 (Hold). The Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult. However, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.    

Other Stocks to Consider

Investors can consider other stocks with a positive ESP and Zacks Rank:

Inteliquent Inc. (IQNT - Snapshot Report), with Earnings ESP of +66.7% and Zacks Rank #1 (Strong Buy)

Ingram Micro (IM - Analyst Report), with Earnings ESP of +1.9% and Zacks Rank #2 (Buy)

Echelon Corp (ELON - Snapshot Report), with Earnings ESP of +11.1% and Zacks Rank #2 (Buy).

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