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Host Hotels & Resorts Inc. (HST - Analyst Report) is anticipated to beat the expectations while reporting its fourth-quarter 2012 results before the opening bell on Thursday, Feb 21.

Why a Likely Positive Surprise?

Our proven model shows that Host Hotels is likely to beat earnings since it has the appropriate combination of the following 2 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 +5.41%. 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 assures us 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

Host Hotels – the largest lodging real estate investment trust (REIT) in U.S. – has luxury and upper upscale hotels across hard-to-replicate areas, which have the potential for significant capital appreciation. Benefiting from this, the company has been performing favorably and has delivered an average earnings surprise of 5.60% over the last 4 quarters.

Also, Host Hotels has been consistently making concerted efforts towards increasing shareholders wealth and accordingly, it hiked its dividend payout for the eighth time in a row during the fourth quarter.

Consistent with the upgradation of its overall portfolio, Host Hotels maintained focus on portfolio restructuring activity during the fourth quarter. Notable among these are completion of a joint venture (JV) deal with Hyatt Hotels Corp. (H - Snapshot Report) for a vacation ownership project and the acquisition of 5 hotels in Europe through a JV deal.

In addition, the sale of a Marriott International, Inc.’s (MAR - Analyst Report) property is a significant transaction in this respect. We expect this to provide Host Hotels with a relatively steady source of revenue and prove accretive to its fourth-quarter earnings.

Other Stocks to Consider

Here is another REIT that you may want to consider as our model shows it has the right combination of elements to post an earnings beat this season:

Public Storage (PSA - Analyst Report) has an Earnings ESP of +0.57% and carries a Zacks Rank #3. The company is scheduled to report its earnings on Feb 21, after the closing bell.

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