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We expect Deckers Outdoor Corp. — designer, producer, and brand manager of innovative, niche footwear and accessories — to beat expectations when it reports third-quarter 2013 results on Oct 24, 2013.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Deckers currently has an Earnings ESP of +4.17%. This is because the Most Accurate estimate stands at 75 cents, while the Zacks Consensus Estimate is pegged at 72 cents.

Zacks Rank #1 (Strong Buy): 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 Deckers’ Zacks Rank #1 (Strong Buy) and +4.17% ESP makes us very confident regarding a positive earnings beat on Oct 24.

What is Driving the Better-than-Expected Earnings?     

Deckers is trying every means to reposition itself to keep afloat in a difficult consumer environment. Such measures include focusing on new product introductions, effective cost management and new store openings. The company is also expanding its footprint by targeting profitable markets. Management is eyeing opportunities for store expansion in Asia, mainly Japan and China, and seeks to enhance the company’s presence in South Korea, Taiwan, Mongolia, Singapore and Australia. In the last four quarters, Deckers has outperformed the Zacks Consensus Estimate by an average of 44.1%.

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:

Hanesbrands Inc. , Earnings ESP of +7.02% and a Zacks Rank #1 (Strong Buy).

DSW Inc. , Earnings ESP of +2.59% and a Zacks Rank #2 (Buy).

Nordstrom Inc. , Earnings ESP of +3.03% and a Zacks Rank #3 (Hold).

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