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Electric power company, Pike Corporation (PIKE - Snapshot Report) is set to report fiscal second-quarter 2014 results on Feb 4, after the market closes. In the last quarter, it delivered a 76.9% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider

In the first quarter of fiscal 2014, Pike posted disappointing financial results. Earnings per share plunged 88.5% year over year to 3 cents due to a decline in sales and margins. Revenues fell 21.0% year over year to $193.3 million due to a reduction in storm-related activities. The revenue decline led to a drop in margins, wherein gross margin went down 480 basis points year over year to 10.3%.

Although management expects a hike in revenues in the fiscal second quarter, storm-related activities are expected to remain low. Considering the major contribution of storm-related revenues to the total revenue, we do not expect to see much improvement in the to-be-reported quarter.

Earnings Whispers?

Our proven model does not conclusively show that Pike is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as we see below.

Zacks ESP:  This is because the Most Accurate estimate stands at 8 cents, flat with the Zacks Consensus Estimate. Hence, the difference is 0.00%.

Zacks Rank: Pike’s Zacks Rank #3 (Hold) 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.

Other Stocks to Consider

Here are other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Otter Tail Corporation (OTTR - Snapshot Report), Earnings ESP of +9.76% and a Zacks Rank #2 (Buy).

Wisconsin Energy Corp. (WEC - Analyst Report), Earnings ESP of +6.90% and a Zacks Rank #2.

Westar Energy, Inc. (WR - Snapshot Report), Earnings ESP of +3.57% and a Zacks Rank #2.

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