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The world’s largest manufacturer of toys, Mattel, Inc. (MAT - Analyst Report) is expected to beat expectations when it reports fourth quarter and full year 2012 results on Feb 1, 2013, before the opening bell.

Why a Likely Positive Surprise?

Our proven model shows that Mattel is likely to beat earnings as it has the appropriate combination of two key ingredients:

Positive Zacks ESP: Earnings ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +3.51%. This is a meaningful and leading indicator for a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Mattel currently retains a Zacks Rank #3 (Hold) which increases the predictive power of its ESP.

The combination of the stock’s Zacks Rank #3 (Hold) and +3.51% Earnings ESP makes us confident of a positive earnings surprise in the to-be-reported quarter.

Stocks with Zacks Ranks of #1, #2 and #3 have significantly higher chances of beating the earnings.

What is Driving the Better Than Expected Earnings?

Mattel remains the market leader in the global toy industry with its diverse portfolio of mature as well as high-growth brands and is comfortably positioned to benefit from any positive trend in the industry.

After relatively weak performances in the first quarter, the company has been performing favorably during the past two successive quarters and has delivered an average earnings surprise of 7.25% over the last four quarters.

The company’s increasing international footprint, particularly in the emerging markets, new franchises and entertainment partnerships and its cost containment initiatives are considered to be key growth drivers. Further, Mattel’s recent acquisition of HIT Entertainment is expected to provide this Calif based toy maker with a considerable up-market potential which will prove accretive to the fourth-quarter earnings.

Other Stocks to Consider

Mattel is not the only stock performing impressively this earnings season. We also observe that there are other companies, which are likely to beat earnings.

LeapFrog Enterprises Inc. (LF - Snapshot Report) has Earnings ESP of +4.08% and Zacks Rank #1 (Strong Buy). The company is scheduled to report its earnings on Feb 6 after the closing bell.

Melco Crown Entertainment Limited (MPEL - Snapshot Report) has Earnings ESP of +10.00% and Zacks Rank #1(Strong Buy). The company is also scheduled to report its earnings on Feb 6.

Boyd Gaming Corp. (BYD - Snapshot Report) has Earnings ESP of +18.75% and Zacks Rank #3 (Hold).

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