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Intel Corp. (INTC - Analyst Report) is set to report fourth-quarter 2013 results on Jan 16. Last quarter, it posted a 9% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company’s third-quarter earnings beat the Zacks Consensus Estimate by 7 cents. Revenues were up 5.2% sequentially and 0.2% year over year driven by higher sales across all its business segments. Though Intel’s client business continues to be impacted by PC market cannibalization, all the other business segments performed well.

The third quarter was strong for Intel in terms of sequential margin growth. This was mainly attributable to lower production costs, lower 14-nm start-up costs and higher volumes as well as the re-classification of some costs related to process engineers, such as R&D expenses.

For the fourth quarter, Intel expects revenues of around $13.7 billion (+/-$500 million), up 1.6% sequentially and 1.7% year over year (short of the consensus estimate of $14.0 billion). The gross margin is expected to be around 61% (+/-2 percentage points).

Earnings Whispers?

Our proven model does not conclusively show that Intel will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents. Hence, the difference is 0.00%.

Zacks Rank #3 (Hold): Intel’s Zacks Rank when combined with a 0.00% 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

You could consider other stocks with a positive earnings ESP and Zacks Rank #1, 2 or 3 such as:

Helmerich & Payne, Inc. (HP - Analyst Report), with Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy).

Western Digital Corporation (WDC - Analyst Report), with Earnings ESP of +1.93% and a Zacks Rank #1.

First Interstate Bancsystem Inc. (FIBK - Snapshot Report), with Earnings ESP of +6.52% and a Zacks Rank #1.

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