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Expedia Inc. (EXPE - Analyst Report) is set to report fourth-quarter 2013 results on Feb 6. Last quarter, it posted a 6.4% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Expedia’s third-quarter earnings of $1.26 soared 124.1% sequentially and 0.3% year over year driven by strong growth in the online travel booking industry. Revenues of $1.40 billion were up sequentially as well as year over year, attributable to healthy growth rates across most brands, especially for Expedia, Trivago and Hotels.com.

Margins expanded in the quarter driven by higher volumes. We believe Expedia’s growth in Asia (much lower ADRs and revenue per room night) remains much stronger than other regions and this will likely cast a negative impact on margins, while driving up volumes.

Additionally, TripAdvisor’s transition to the metasearch model appears successful, which had a positive impact on the last quarter results.

Earnings Whispers?

Our proven model does not conclusively show that Expedia will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP(Expected Surprise Prediction) 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 75 cents. Hence, the difference is 0.00%.

Zacks Rank #2 (Buy): Expedia’s Zacks Rank #2 (Buy) 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 which, according to our model, are expected to beat earnings estimates, like:

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

Westlake Chemical Corp. (WLK - Snapshot Report), with Earnings ESP of +2.27% and a Zacks Rank #1.

Knightsbridge Tankers Limited (VLCCF - Snapshot Report), with Earnings ESP of +12.50% and a Zacks Rank #1.

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