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Danaher Corporation(DHR - Analyst Report) is set to report third quarter 2013 results before the opening bell on Oct 17. Last quarter, Danaher posted a 2.35% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors this Past Quarter

Danaher is affected by the poor macroeconomic conditions. The instability in Western Europe has also proved to be a drag for the company. Danaher’s Test & Measurement Tools segment has been affected by a weaker-than-expected product demand, leading to decreased margin expectations in the segment. The company’s operating cash flow had decreased in the quarter driven by increasing capital expenditures. Danaher had provided a tepid outlook for the third quarter and forecasted earnings to be in the range of 78 cents to 83 cents a share.

Earnings Whispers?

Our proven model does not conclusively show that Danaher is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #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 82 cents while the Zacks Consensus Estimate is at 83 cents. That is a difference of -1.21%.

Zacks Rank #3 (Hold): Danaher’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. 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

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

Spansion Inc. (CODE - Snapshot Report),with Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).

Micron Technology Inc. (MU - Analyst Report),with Earnings ESP of +11.63% and a Zacks Rank #2 (Buy).

Honeywell International Inc. (HON - Analyst Report), with Earnings ESP of +0.81% and a Zacks Rank #2 (Buy).

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