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Industrial goods manufacturer Generac Holdings Inc. (GNRC - Snapshot Report) is set to report third-quarter 2013 results before the opening bell on Oct 24. In the last reported quarter, it delivered a 25.0% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider

In the second quarter of 2013, Generac posted earnings per share of 95 cents, reflecting an increase of 63.8% year over year. Earnings were boosted by a hike in revenues as well as margins during the quarter. The company recorded 45% year-over-year rise in revenues to $346.7 million, driven by increased demand from households for backup power and by the acquisition of Ottomotores.

Based on the past performance, in 2013, the company expects to record a 20% year-over-year increase in sales. Strong demand for home standby and portable generators, and an improved outlook for Commercial & Industrial shipments are likely to help the company achieve its goal.

Generac has exhibited steady performance in surpassing earnings expectations in the previous nine quarters. With the acquisition of Ottomotores and Tower Light business, we expect the company to prosper in its inorganic growth path, in addition to an increase in core sales.

Earnings Whispers

Our proven model shows that Generac is likely to beat earnings as it has the appropriate combination of the following key ingredients:

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.41%. This indicates a likely positive earnings surprise.

Zacks Rank #3 (Hold): This increases the predictive power of its ESP. The combination of its Zacks Rank and Earnings ESP assures us of a positive earnings surprise in the to-be-reported quarter.

Stocks with a Zacks Rank #1, 2 or 3 have significantly higher chances of beating the earnings estimates. The sell-rated stocks (#4 and 5) going into an earnings announcement should never be considered.

Other Stocks to Consider

Other stocks in the electronic power sector that have both a positive earnings ESP and a favorable Zacks Rank are:

InvenSense, Inc. (INVN - Snapshot Report), Earnings ESP of +10.53% and a Zacks Rank #2 (Buy).

Littelfuse Inc. (LFUS - Snapshot Report), Earnings ESP of +1.67% and a Zacks Rank #2 (Buy).

Geospace Technologies Corporation (GEOS - Snapshot Report), Earnings ESP of +2.89% and a Zacks Rank #3 (Hold).

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