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We expect the world’s leading automaker Ford Motor Co. (F - Analyst Report) to beat expectations when it reports 2012-fourth quarter results before the opening bell on Jan 29.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Earnings ESP (Read: Zacks Earnings ESP: A Better Method), the difference between the Most Accurate estimate of 28 cents and the Zacks Consensus Estimate of 26 cents, stands at +7.69%.

Zacks #3 Rank (Neutral): Ford currently retains a Zacks Rank #3 (Hold).

The combination of the stock’s Zacks Rank #3 (Hold) and +7.69% ESP makes us confident of a positive earnings beat on Jan 29.

What's Driving the Better than Expected Earnings?

Ford is gaining momentum with its new product launches, continued focus on hybrid vehicles, increased investments in the emerging markets, “One Manufacturing” cost saving strategy as well as improving macroeconomic conditions in the U.S.

The company has delivered solid earnings results in the third quarter, beating the Zacks Consensus Estimate by 33.33%. In fact, it delivered positive earnings surprises in three of the past four quarters, leading to a positive average earnings surprise of 6.49%.

Most estimates were revised higher after the announcement of third quarter results. The Zacks Consensus Estimate for 2012 grew 7.14% over the last 90 days to $1.35 per share. As for 2013, the Zacks Consensus Estimate went up 2.78% over the same timeframe to $1.48 per share.

Ford intends to hire 2,200 salaried workers in the U.S. this year in order to support its new product launches at a fast pace. This, along with the recent dividend hike and expected recovery in the auto industry sales, sent the stock to 52-week high of $14.30 on Jan 17.

The automaker expects to meet challenges in the U.S. and Europe by executing its “One Ford” plan. The company aims to revive sales by rolling out new models with best in quality, fuel efficiency, safety and design.

It plans to launch as many as 6 new Lincoln models in the next 3 years, including a small car in 2014. It also plans to roll out as many as 20 new models in Europe over the next three years.

Other Stocks to Consider

Ford is not the only bullish firm this earnings season. We also see likely earnings beats coming from the following industry peers:

General Motors Company (GM - Analyst Report): Earnings ESP of +5.88% and Zacks Rank #3 (Hold).

Navistar International Corporation (NAV - Analyst Report): Earnings ESP of +6.02% and Zacks Rank #3 (Hold).

Meritor Inc. (MTOR - Analyst Report): Earnings ESP of +100.00% and Zacks Rank #3 (Hold).

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