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DaVita HealthCare Partners Inc. (DVA - Analyst Report) is set to report first-quarter 2014 results on May 1, 2014. Last quarter, it posted a 1.02% surprise. Let’s see how things are shaping up for this announcement.

Factors This Past Quarter

In the last quarter, DaVita had undertaken a number of initiatives to enhance its worldwide presence which should make way for higher revenue generation. The kidney care services provider has partnered with one of the leading nephrology practices in Germany – Praxis mit Nahe and SCAN Health Plan – to expand its services in Düsseldorf, and Los Angeles and Orange Counties, respectively.

DaVita has started enrolling members under its HMO plan, VillageHealth®, beginning Jan 2014 under its partnership with SCAN. This should boost revenues going forward. The contract with the Kingdom of Saudi Arabia's Ministry of Health in Feb 2014 should also expand the membership base of the company. However, high debt levels and the effect of sequestration raise concern.

Further, DaVita is continuing with its global expansion strategies that place it favorably to generate sales growth going forward. DaVita expanded its laboratory operations in DeLand and acquired three hemodialysis centers from Sinar Indentiti Sbn Bhd, a Malaysian dialysis provider, to expand its services in Malaysia.

Earnings Whispers?

Our proven model does not conclusively show that DaVita 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.

Positive Zacks ESP:  That is because the Most Accurate estimate stands at 94 cents per share while the Zacks Consensus Estimate is pegged at 87 cents per share, making the difference 8.05%.

Zacks Rank #4 (Sell): Although the stock has a positive ESP, DaVita’s Zacks Rank #4 decreases the predictive power of ESP. Thus, even when combined with a positive ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially if the company sees zero or 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:  

MedAssets, Inc. (MDAS - Snapshot Report) with Earnings ESP of +3.45% and Zacks Rank #2 (Buy).

Humana Inc. (HUM - Analyst Report) with Earnings ESP of +1.55% and Zacks Rank #3 (Hold).

Intrexon Corp. (XON - Snapshot Report) with Earnings ESP of +22.22% and Zacks Rank #3.

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