Teradyne Inc. ( TER - Analyst Report ) is set to report fourth quarter 2012 results on Jan 21. Last quarter it posted an 18% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Though Teradyne was affected by seasonal slowdown and the recent economic downturn, the company’s sales growth rates in the third quarter were above the year-ago comparable period and better than management guidance due to strong demand in the mobility market for both Semiconductor Test and LitePoint products.

The LitePoint business has greatly helped the company to generate revenue from markets such as smartphones and tablets that witness much stronger growth than the company’s traditional markets. It has also improved Teradyne’s future growth prospects due to the significant opportunities unfolding in the high-growth wireless market.

However, the heavy expenditure incurred due to the launch of new products and higher input costs resulted in lower margins for Teradyne in the third quarter. Competitive pressures also forced Teradyne to lower prices, aggravating the margin decline.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at 1 cent while that for fiscal 2012 stands at $1.61.

Teradyne has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 25.8%. The biggest increase was 45.5% in the fourth quarter of 2011.

Estimate revisions have been minimal in the last 30 days, with one upward estimate revision in the past 60 days. As a result, the Zacks Consensus Estimate has remained unchanged for the fourth quarter as well as for 2012 over the last 30 days. Over the last 60 days, the Zacks Consensus has gone up by almost 100% and 0.62% for the fourth quarter and in 2012.

The lack of downward movement in estimates signals that the fourth quarter might not be too different from the past quarters. Moreover, the stock carries a Zacks Rank #2 (Buy).

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

Our model states that a stock needs to have both a Positive Earnings ESP and a Zacks Rank of #1, #2 or #3 to beat earnings estimates. You could, however, consider stocks like:

Expedia Inc. ( EXPE - Analyst Report ) , with Earnings ESP of 1.82% and Zacks Rank #2 (Buy)

Amazon.com Inc. ( AMZN - Analyst Report ) , with Earnings ESP of 20.69% and Zacks Rank #3 (Hold)