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Cousins Properties Inc. (CUZ - Analyst Report) – a real estate investment trust (REIT) – is expected to beat expectations when it reports fourth-quarter 2012 results after the closing bell on Wednesday, Feb 13.

Why a Likely Positive Surprise?

Our proven model shows that Cousins Properties is likely to beat earnings since 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 +20.00%. This indicates a likely positive earnings surprise.

Zacks Rank #3 (Hold): This increases the predictive power of its ESP. The combination of its Zacks Rank and 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 estimates. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.

Key Drivers

Cousins Properties has a diversified portfolio of office, retail, urban residential and single-family communities that are mainly located in the high-growth Sun Belt region. This mitigates the operating risks associated with the economic down cycles involved in operating a single business segment. Benefiting from this, the company has been performing favorably and has delivered an average earnings surprise of 16.34% over the last four quarters.

Also, the company maintained focus on upgrading its overall portfolio with the acquisition of premium assets in the fourth quarter. Notable among these are the acquisition of Post Oak Central in the Galleria submarket of Houston and the purchase of residual 80% interest in Terminus 200 tower in the Buckhead submarket. We expect this to provide Cousins Properties with a relatively steady source of revenue and prove accretive to the fourth-quarter earnings.

Other Stocks to Consider

Here are some other REITs you may want to consider as our model shows they have the right combination of elements to post an earnings beat this season:

Ventas Inc. (VTR - Analyst Report) has an Earnings ESP of +2.06% and carries a Zacks Rank #2 (Buy). The company is scheduled to report its earnings on Feb 15, before the opening bell.

Host Hotels & Resorts Inc. (HST - Analyst Report) has an Earnings ESP of +5.41% and holds a Zacks Rank of 3. The company is scheduled to report its earnings on Feb 21, before the opening bell.

Vornado Realty Trust (VNO - Analyst Report) has an Earnings ESP of +13.04% and carries a Zacks Rank of 3. The company is scheduled to report its earnings on Feb 26, after the closing bell.

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