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We expect Newell Rubbermaid Inc. (NWL - Analyst Report), the producer of Sharpie pens and Rubbermaid containers, to beat expectations when it reports fourth-quarter 2013 results before the market opens on Jan 31.

Why a Likely Positive Surprise?

Our proven model shows that Newell Rubbermaid may beat earnings because it has the right combination of 2 key components.

Positive Zacks ESP: Newell Rubbermaid currently has an Earnings ESP of +2.17%. This is because the Most Accurate estimate stands at 47 cents per share, while the Zacks Consensus Estimate is pegged at 46 cents.

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

The combination of Newell Rubbermaid’s Zacks Rank #3 (Hold) and Earnings ESP of +2.17% makes us confident of a positive earnings beat on Jan 31.

What is Driving Better-than-Expected Earnings?

Newell Rubbermaid is one of the leading manufacturers of home and office products in the U.S. The company continues to progress well with its ‘Growth Game Plan’ strategy announced in Oct 2012, under which it has sold its hardware and Teach Platform businesses. Under the ‘Growth Game Plan’ strategy, the company intends to lay off approximately 10% of the workforce, build a new organizational model as well as leadership team. We believe that the overall growth plan will help Newell Rubbermaid reduce the complexities of the organization, boost customer services and sourcing functions as well as increase investments in the core business areas.

Further, we believe that Newell’s Project Renewal program will help reduce operating costs and the complexities of the organization, while increasing investments in the most important growth areas within the business.

Newell has topped the Zacks Consensus Estimate for the past several years, with a trailing four-quarter average surprise of 4.45%. In the last concluded quarter, the company outdid Zacks’ expectations by 4.0%.

Other Stocks to Consider

Newell Rubbermaid is not the only firm we are looking up to this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Michael Kors Holdings Limited’s (KORS - Analyst Report) Earnings ESP stands at +1.15% and it carries a Zacks Rank #2 (Buy).

Abercrombie & Fitch Co. (ANF - Analyst Report) has an Earnings ESP of +1.96% and a Zacks Rank #2 (Buy).

The Home Depot Inc. (HD - Analyst Report) with an Earnings ESP of +1.39% holds a Zacks Rank #2 (Buy).

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