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Walgreen Co. (WAG - Analyst Report) is scheduled to report its third-quarter fiscal 2014 results before the opening bell on Jun 24. In the last reported second quarter, this drug retail giant had posted a negative earnings surprise of 2.15% after delivering two consecutive quarters of in-line results. Let’s see how things are shaping up for this announcement.

Factors at Play

As reported in the company’s May-sales release, Walgreens’ total sales for the third quarter of fiscal 2014 came in at $19.45 billion, reflecting a sales growth of 4.3% year over year and a marginal beat over the Zacks Consensus Estimate of $19.24 billion.

In May, the company also witnessed higher comparable store sales and front-end comparable store sales. Additionally, prescriptions filled at comparable stores and comparable pharmacy sales showed an improvement.

In its latest effort to boost its market presence, Walgreens has decided to focus on its supply chain performance. We currently look forward to synergies from the Alliance Boots deal. Besides, the deal with AmerisourceBergen Corporation (ABC - Analyst Report), likely to create a leader in the generic and branded drug purchasing space, is another major upside.

Going ahead, Walgreens is optimistic about financial and operational benefits from the AmerisourceBergen deal for fiscal 2014, with margin expansion and bottom-line accretion. Evidently, management seems to have chalked out a number of strategic initiatives to revive growth at the company. 

Earnings Whispers?

Our proven model does not conclusively show that Walgreens is likely to beat earnings this quarter. It is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) 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: Earnings ESP for Walgreens is -1.06%, since the Most Accurate estimate of 93 cents stands below the Zacks Consensus Estimate of 94 cents.

Zacks Rank: Although Walgreens’ Zacks Rank #3 (Hold) increases the predictive power of ESP, when combined with a -1.06% ESP, it makes surprise prediction difficult.

Other Stocks to Consider

Here are two 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:  

Cardinal Health, Inc. (CAH - Analyst Report) has an earnings ESP of +2.50% and bears a Zacks Rank #3. Cardinal Health will report fourth quarter fiscal 2014 earnings on Aug 7.

Intuitive Surgical, Inc. (ISRG - Analyst Report) has an earnings ESP of +8.19% and holds a Zacks Rank #3. The company is expected to report its third quarter fiscal 2014 earnings on Jul 22.

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