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Philip Morris (PM - Analyst Report) is set to report fourth quarter and full year 2012 results on Feb 7. Last quarter it posted a +4.3% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Higher revenues and the favorable impact of lower shares outstanding helped Philip Morris earn a modest profit in the past quarter. The company maintains a strong portfolio of brands and enhances its brand value with the help of continued innovations.

The Marlboro brand of cigarettes maintained a leading share in the market with aggressive marketing of the brand and innovative packaging and taste. It helped the company to take share from competitors.

The company’s foray into less harmful tobacco alternatives also addresses changes in consumer preferences. Moreover, Philip Morris continues to penetrate rapidly into emerging markets with rising populations. It has helped the company expand its customer base and thus boost earnings.

Earnings Whispers?

Our proven model does not conclusively show that Philip Morris is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  That is because the Most Accurate Estimate stands at $1.23 while the Zacks Consensus Estimate is lower at $1.22. That is a difference of +0.82%.

Zacks Rank #4 (Sell): Philip Morris’ Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with a positive ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (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 to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

J.M. Smucker Co. (SJM - Analyst Report): Earnings ESP of +0.73% and Zacks Rank #2 (Buy).

Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report): Earnings ESP of +3.08% and Zacks Rank #2 (Buy).

Reynolds American, Inc. (RAI - Analyst Report): Earnings ESP of +1.35% and Zacks Rank #3 (Hold).

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