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Bethesda, Maryland-based hospitality company Marriott International, Inc. (MAR - Analyst Report) is set to report third-quarter 2013 results after the market closes on Oct 30.

In the last four quarters, it delivered a positive earnings surprise of 5.57%. Let’s see how things are shaping up for the company prior to the announcement.

Factors to Consider

Marriott is one of the world’s leading hospitality companies that manages and franchises an extensive portfolio of lodging facilities of various sizes and scale under 17 brands. The company has a solid development pipeline which should benefit it over the long term.

However, the hotel industry is cyclical in nature and is highly dependent on the overall health of the U.S. and the global economy. Management expects the budget sequestration, effective since Mar 1, 2013, to hamper the company’s business momentum in North America to some extent.

Moreover, we believe that sluggish group booking demand will hurt the company’s financials at the current level. The weak economic conditions in Europe and the slowdown in China also added to the woes.

Earnings Whispers

Our proven model does not conclusively show that Marriott is likely to beat the Zacks Consensus Estimate in the upcoming quarter. To beat the estimate, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3. However, this is not the case here due to the following reasons:

Negative Zacks ESP: The company’s Most Accurate estimate stands at 44 cents, while the Zacks Consensus Estimate is pegged slightly higher at 45 cents. This results in an Earnings ESP of -2.22%.

Zacks Rank: Marriott’s Zacks Rank #2 (Buy) has little effect on the predictive power of ESP because the Zacks Rank #2 when combined with a -2.22% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Other stocks from the broader consumer discretionary sector that have both a positive earnings ESP and a favorable Zacks Rank are:

Melco Crown Entertainment Limited (MPEL - Snapshot Report), with Earnings ESP of +6.45% and a Zacks Rank #1 (Strong Buy).

Bally Technologies, Inc. (BYI - Snapshot Report), with Earnings ESP of +1.11% and a Zacks Rank #3 (Hold).

Penn National Gaming Inc. (PENN - Snapshot Report), with Earnings ESP of +2.38% and a Zacks Rank #3 (Hold).

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