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We expect The ADT Corporation (ADT - Analyst Report) to beat expectations when it reports fourth-quarter and fiscal 2013 results before the opening bell tomorrow, Nov 20.

Why a Likely Positive Surprise?

Our proven model shows that ADT Corporation is likely to beat earnings since it has the appropriate combination of two key ingredients:

Positive Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.17%. This indicates a likely positive earnings surprise.

Zacks Rank #3 (Hold): Stocks with a Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

ADT Corporation’s Zacks Rank #3 increases the predictive power of its ESP. The combination of its Zacks Rank and Earnings ESP makes us confident of a positive earnings surprise in the to-be-reported quarter.

Key Earnings Drivers

The company is focussing on investments in its core business, improving its operating efficiency and pursuing acquisitions to complement its organic growth. Moreover, ADT Corporation announced the acquisition of security systems provider Devcon Security with an aim to further expand its customer base and to reap benefits from its sales force and distribution capabilities. Also, ADT Corporation’s decent operating platform and cost-saving initiatives keep us bullish on the stock.

The company had repurchased 7 million shares for $296 million during the third quarter. Moving forward, the company aims to return excess cash to shareholders in the form of both dividends and share buybacks  

Given the improving market fundamentals during the third quarter, we expect the company to post decent quarterly results this time.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in the imminent future.

Stantec Inc (STN - Snapshot Report) has an Earnings ESP of +1.33% and a Zacks Rank #1 (Strong Buy).

Honeywell International Inc (HON - Analyst Report) has an Earnings ESP of +0.20% and a Zacks Rank #3 (Hold).

WPP plc (WPPGY - Analyst Report) has an Earnings ESP of +1.23% and a Zacks Rank #2 (Strong Buy).

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