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The Gap Inc. (GPS - Analyst Report), a global specialty retailer, is slated to post its fourth-quarter fiscal 2013 earnings results on Feb 27, 2014. In the previous quarter, it reported a positive earnings surprise of 1.4%. Let’s see how things are shaping up for this announcement.       

Growth Factors this Past Quarter

The company’s third-quarter fiscal 2013 results witnessed robust top- and bottom-line growth. Comparable store sales also improved, mainly benefiting from the consistent sales growth in the Gap Global brand. The company’s continued focus on turnaround strategies for improving the top line has been successful, given the solid comps and sales performances in the trailing 5 quarters. Further, Gap’s online segment performed well and operating income also increased, owing to the company’s cost-cutting initiatives. Gap also returned excess cash to shareholders in the form of dividends and repurchases in the third quarter.

Earnings Whispers?

Our proven model does not conclusively show that Gap 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: Gap currently has an Earnings ESP (Expected Surprise Prediction) of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 66 cents.

Zacks Rank: Gap’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #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

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:  

Natus Medical Inc. (BABY - Snapshot Report)), Earnings ESP of +8.7% and a Zacks Rank #1 (Strong Buy).

Susser Holdings Corporation (SUSS - Snapshot Report), Earnings ESP of +2.38% and a Zacks Rank #2 (Buy).

AutoZone Inc. (AZO - Analyst Report), Earnings ESP of +1.99% and a Zacks Rank #2 (Buy).

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