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Costco Wholesale Corporation (COST - Analyst Report), the warehouse retailer, is slated to report its third-quarter fiscal 2014 results on May 29, 2014. In the last quarter, it posted a negative surprise of 10.26%. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

Costco has been struggling with its bottom-line performance, as in the last trailing four quarters it missed the Zacks Consensus Estimate by an average of 5.5%. The aggressive pricing to counter competition, gain market share and drive traffic may depress sales and margins, and in turn the bottom line.

Earnings Whispers?

Our proven model does not conclusively show that Costco is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Negative Zacks ESP: ESP for Costco is -4.59%. This is because the Most Accurate estimate stands at $1.04, while the Zacks Consensus Estimate is pegged at $1.09 per share.

Zacks Rank #3 (Hold): Costco’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

Skechers USA Inc. (SKX - Analyst Report) has an Earnings ESP of +12.20% and a Zacks Rank #1 (Strong Buy).

Sanderson Farms, Inc. (SAFM - Snapshot Report) has an Earnings ESP of +2.44% and a Zacks Rank #1.

Lions Gate Entertainment Corp. (LGF - Analyst Report) has an Earnings ESP of +2.56% and a Zacks Rank #3.

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