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Flowserve Corp. (FLS - Analyst Report) is expected to report its fourthquarter 2013 results on Feb 21. Last quarter it posted a +1.95% surprise. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Earnings Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +0.71%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks #3 Rank (Neutral): Investors shouldnote that stocks with Zacks Ranks #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement. 

The combination of Flowserve’s Zacks Rank #3 (Hold) and +0.71% ESP makes us very confident about a positive earnings beat on Feb 21st.

What is Driving the Better-Than-Expected Earnings?

Strong backlog exceeding $700 million, strong bookings increasing in the high single-digits year over year and focused end-user aftermarket strategies are expected to lead to a positive earnings surprise in the upcoming quarter.

The positive trend is seen in the trailing four-quarter average surprise of 1.08%, which was greatly helped by the 1.95% surprise in the last reported quarter. This was possible because bookings by end markets such as the oil and gas, and chemical industries, along with modest growth in the general industries and water business reported strong growth year over year.

Other Stocks to Consider

Flowserve is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

Altra Holdings (AIMC - Snapshot Report) with Earnings ESP of +4.76% and Zacks #1 Rank (Strong Buy).

Graco Inc. (GGG - Snapshot Report) with Earnings ESP of +1.39% and Zacks #2 Rank (Buy).

Idex Corp.(IEX - Analyst Report) with Earnings ESP of +1.41% and Zacks#2Rank (Buy).

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