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We expect DeVry Inc. (DV - Analyst Report) to beat expectations when it reports fiscal third quarter 2013 results on Apr 23. Last quarter it posted an impressive 55.36% positive surprise.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Expected 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 is at +6.02%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #1 (Strong Buy): DeVry carries a Zacks Rank #1. Note that stocks with Zacks Rank #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 DeVry’s Zacks Rank # 1 (Strong Buy) and +6.02% ESP makes us very confident in looking for a positive earnings beat on Apr 23.

What is Driving the Better Than Expected Earnings?

We believe that further progress from its performance improvement plan, improvement in new starts and consistently rising demand for its healthcare programs will help DeVry beat expectations this quarter once again.

Continued progress on its performance improvement plan to align costs, regain enrollment growth and make growth investments, has helped the company beat expectations in both the quarters of fiscal 2013; a turnaround from weak quarterly results in fiscal 2012.

In order to combat declining profits and student enrollments, DeVry has undertaken cost-saving initiatives like workforce reduction and curbed discretionary spending. Additionally, in order to revive enrollment growth, the company is working on its marketing efforts to build brand awareness; building relationships with high schools, community colleges, corporations, and government/military institutions; and improving its technology. DeVry is also making targeted investments to drive future growth like opening new campuses, diversifying into new high demand education programs and investing in its faculty.

Other Stocks to Consider

DeVry is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 companies from the service sector:
The Home Depot, Inc. (HD - Analyst Report), Earnings ESP of +5.20% and Zacks Rank #3 (Hold).

J. C. Penney Company, Inc. (JCP - Analyst Report), Earnings ESP of +1.37% and Zacks Rank #3 (Hold).

Saks Incorporated , Earnings ESP of +5.26% and Zacks Rank #3 (Hold).
 

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