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Hamilton, Bermuda-based drilling firm SeaDrill Limited (SDRL - Snapshot Report) is scheduled to report its fourth-quarter and full-year 2012 results on Thursday, Feb 28, 2013.

In the third quarter, the company delivered a negative 40.30% earnings surprise due to foreign exchange losses and higher operating expenses. In fact, SeaDrill has delivered negative earnings surprises in 2 of the last 4 quarters, with an average miss of 6.14%.  Let’s see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

We believe that Seadrill intends to benefit from the current strength in demand scenario and utilize the units in various offshore locations across the globe.

However, SeaDrill’s financial and operational performances face a number of headwinds, including changes in exploration and production spending pattern, commodity price fluctuation, geopolitical risks, regional spending trends, competition, technological innovation and changes in economic conditions.

Moreover, the Zacks Consensus Estimate for the fourth quarter of 2012 moved down 8.57% over the last 90 days to 64 cents per share. For fiscal 2012, the Zacks Consensus Estimate fell 2.06% over the same timeframe to $2.85 per share.

Earnings Whispers

Our proven model does not conclusively show that SeaDrill Limited is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Negative Zacks ESP:This is because the Most Accurate estimate stands at 53 cents while the Zacks Consensus Estimate is higher at 64 cents. This results in a difference of -17.19%.

Zacks Rank #3 (Hold): SeaDrill’s Zacks Rank #3, however, increases the forecasting power of ESP. That said, we also need to have a positive ESP to be confident of an earnings surprise call.

Other Stocks to Consider

Here are some other companies that warrant a look as these have the right ingredients to report an earnings beat this quarter:

Northern Tier Energy LP (NTI - Snapshot Report), earnings ESP of +3.65% and Zacks Rank #1 (Strong Buy).

Express Inc. (EXPR - Snapshot Report), earnings ESP of +1.35% and a Zacks Rank #1 (Strong Buy).

New York & Company Inc. (NWY - Snapshot Report), earnings ESP of +12.50% and Zacks Rank #2 (Buy).

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