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Groupon, Inc (GRPN - Analyst Report) is set to report fourth quarter 2013 results on Feb 20, 2014. Last quarter, it posted a 100% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Groupon is well positioned to gain from the rising e-commerce spending on mobile devices, a profitable domestic market and an under-penetrated international market. We expect these opportunities to continue to drive top-line growth going forward. Moreover, increased traction in the mobile business is another positive for the company.

However, stiff competition from the likes of technology stalwarts such as eBay, Amazon and Google combined with a volatile macroeconomic environment and continued investments aimed at enlarging merchant base are the major headwinds going forward.

Moreover, the departure of product head Jeffry Holden just prior to the results can negatively impact product development in the near term.

Earnings Whispers?

Our proven model does not conclusively show that Groupon is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #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 a loss of 1 cent. Hence, the difference is 0.00%.

Zacks Rank: Groupon’s Zacks Rank #3 (Hold) when combined with an earnings ESP of 0.00% makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some 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:  

Hewlett Packard (HPQ - Analyst Report), Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).

Actavis Plc (ACT - Analyst Report), Earnings ESP of +0.33% and a Zacks Rank # 2.

Equinix Inc (EQIX - Analyst Report), Earnings ESP of +12.82%and a Zacks Rank #3.

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