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Vale S.A. (VALE - Analyst Report) is set to report fourth-quarter 2013 results on Feb 26, after the market closes. Last quarter, the company posted a 6.25% positive surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Vale reported strong earnings for the third quarter of 2013, with underlying earnings of 72 cents per ADR, up 59% year over year. Revenues increased 11% year over year to $13 billion. In the reported quarter, the company delivered strong production for most of its commodities. Iron ore shipments of 83.6 million tons were the third highest in a quarter in Vale’s history.

In the to-be-reported quarter, Vale has taken many initiatives to streamline its asset portfolio and focus on the more productive ones. Moreover, the company’s initiatives to reduce its costs are paying off.

Earnings Whispers?

Our proven model shows that Vale is likely to beat earnings since it has the appropriate combination of the following two key ingredients:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +17.19%. This indicates a likely positive earnings surprise.

Zacks Rank: Vale’s Zacks Rank #3 (Hold)increases the predictive power of ESP. The combination of its Zacks Rank and Earnings ESP assures us of a positive earnings surprise in the fourth quarter.

Stocks with Zacks Ranks of #1, 2 or 3 have significantly higher chances of beating the earnings estimate. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

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

Hecla Mining Co. (HL - Snapshot Report), with Earnings ESP of +100.00% and a Zacks Rank #3.

Alliance Resource Partners LP (ARLP - Snapshot Report), with Earnings ESP of +0.58% and a Zacks Rank #3.

Coeur Mining, Inc. (CDE - Snapshot Report), with Earnings ESP of +4.35% and a Zacks Rank #3.

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