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OpenTable Inc. is set to report first-quarter 2014 results on May 1. Last quarter, the company posted a positive earnings surprise of 17.5%. It is also worth noting that OpenTable has outperformed the Zacks Consensus Estimate in all the four preceding quarters with a positive earnings surprise average of 18.29%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

We believe that the strong growth in mobile user base and expansion in the overseas markets will boost OpenTable’s top-line growth. Additionally, continuing investments in marketing activities will boost traffic. However, these investments will keep margins under pressure in the near term.

It is also noteworthy that, the company has launched a mobile payments service in San Francisco on a pilot basis, which will help diners to pay for the meal. We believe that strategic initiatives such as these coupled with recent acquisitions will boost OpenTable’ financial position, going forward.

However, competition from Yelp, Inc. (YELP - Snapshot Report) and the speculated entry of Apple (AAPL - Analyst Report) into the restaurant reservation business may increase competition for OpenTable.

Earnings Whispers?

Our proven model does not conclusively show that OpenTable will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #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 31 cents. Hence, the difference is 0.00%.

Zacks Rank: OpenTable’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #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 is another company you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

ON Semiconductor Corp. (ONNN - Analyst Report) has an Earnings ESP of +6.67% and holds a Zacks Rank #1 (Strong Buy).

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