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The Home Depot Inc. (HD - Analyst Report) is scheduled to report its fourth-quarter and fiscal 2013 results on Feb 25. Last quarter, this leading home improvement retailer posted a positive earnings surprise of approximately 6.74%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Home Depot’s better-than-expected third quarter fiscal 2013 earnings came on the back of the ongoing recovery of the U.S. housing market and strong operating performance. Moreover, the company’s top line reflected improvement driven by increased comparable store sales that benefited from comps growth in the U.S. Further, the company reflected strong operating performance registering solid operating margin growth that came primarily from improved gross margin and effective cost management.

Earnings Whispers?

Our proven model does not conclusively project Home Depot as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
 
Negative Zacks ESP: ESP (Expected Surprise Prediction) for Home Depot is -1.41%. This is because the Most Accurate estimate stands at 70 cents, while the Zacks Consensus Estimate is pegged at 71 cents.

Zacks Rank: Home Depot's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.

Other Stocks to Consider

Home Depot is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination to post an earnings beat:

First Solar Inc. (FSLR - Analyst Report) has an Earnings ESP of 8.00% and a Zacks Rank #1 (Strong Buy).

AutoZone Inc. (AZO - Analyst Report) Earnings ESP stands at 1.99% and it carries a Zacks Rank #2 (Buy).

Foot Locker Inc. (FL - Snapshot Report) with an Earnings ESP of 8.00% holds a Zacks Rank #3 (Hold).

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