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Precision Castparts Corp. (PCP - Analyst Report), a manufacturer of complex metal products is likely to beat expectations when it reports fourth quarter 2014 results on May 8.

Why a Likely Positive Surprise?

Our proven model shows that Precision Castparts is expected to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +0.63%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks #2 Rank (Buy): It should be noted that stocks with Zacks Ranks of #1, #2 and #3 have significantly higher chances of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an earnings announcement. 

The combination of Precision Castparts’ Zacks Rank #2 (Buy) and +0.63% ESP makes us confident of earnings beat on May 8.

What is Driving the Better-Than-Expected Earnings?

Increased demand in commercial aerospace and strong oil and gas businesses are expected to lead to a positive earnings surprise in the to-be-reported quarter.

The positive trend is seen in the trailing four-quarter average surprise of 0.25%. The company’s Industrial Gas Turbines (IGT) business is also showing good momentum in its aftermarket backlog as the company is shipping out large quantities of nickel-based, severe service tubular products. The company expects its major end markets to drive organic growth. In addition, the aerospace division is also performing well.

Other Stocks to Consider

Precision is not the only firm looking favorable this earnings season. We also see likely earnings beats coming from these three industry peers:

Embraer SA (ERJ - Analyst Report) has Earnings ESP of +1.82% and carries a Zacks #1 Rank (Strong Buy)

Targa Resources Partners LP (NGLS - Snapshot Report) has Earnings ESP of +2.50% and holds a Zacks Rank #1 (Strong Buy)

The Boeing Company (BA - Analyst Report) has Earnings ESP of +0.51% and has a Zacks #2 Rank (Buy)

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