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Apple Inc. (AAPL - Analyst Report) is set to report fiscal third-quarter 2014 results on Jul 22. In the prior quarter, the company posted earnings surprise of 13.70%. Moreover, the company has posted an average positive earnings surprise of 6.0% over the past four quarters.

Let’s see how things are shaping up for the company in this quarter.

Growth Factors this Past Quarter

We believe that Apple’s third-quarter results will be significantly dependent on iPhone sales. Apple is rumored to release its new iPhone 6 in September, which may negatively impact third-quarter volumes. Consumers tend to postpone buying the older versions of the device prior to a new iPhone launch.

However, iPhone sales will benefit from Apple’s China Mobile partnership despite significant competition from Samsung. We believe that iPad sales will stabilize and improving PC market will also boost Mac sales in the quarter.

For the third quarter, Apple forecasts revenues to be in the range of $36.0 to $38.0 billion. Gross margin is expected to be in the range of 37.0% to 38.0%, while operating expenses are projected to be within $4.4 to $4.5 billion.

Earnings Whispers?

Our proven model does not conclusively show that Apple 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.

Negative Zacks ESP: Apple has a -0.82% ESP. That is because the Most Accurate estimate stands at $1.21 while the Zacks Consensus Estimate is higher at $1.22.

Zacks Rank: Apple’s Zacks Rank #3 (Hold) when combined with a negative 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 are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Silicon Motion (SIMO - Snapshot Report), with an Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).

Western Digital (WDC - Analyst Report), with an Earnings ESP of +4.02% and a Zacks Rank #2 (Buy).

F5 Networks (FFIV - Snapshot Report), with an Earnings ESP of +3.81% and a Zacks Rank #2.

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