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Cigarette company Lorillard Inc (LO - Analyst Report) is set to report its first-quarter 2013 results on Apr 24 before the market opens. Last quarter, it posted a 3.9% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Strong top-line growth driven by the blu e-Cigs electronic cigarette brand and continued increase in retail market share of cigarettes proved to be Lorillard’s strength in the fourth quarter of 2012. The company’s share buyback program and lower tax rates also fueled earnings.

Lorillard’s fourth quarter earnings of 79 cents per share exceeded the prior-year earnings by 8.2%. Net sales surpassed both the Zacks Consensus Estimate and the prior-year quarter on the back of increased revenues from its cigarettes and electronic cigarettes segments. Lorillard’s Newport cigarette brand continued to gain popularity even with higher cigarette pricing amid overall slowdown in the cigarette industry. In addition, sales in the electronic cigarette segment increased almost three times from the prior quarter, owing to the blu e-Cigs brand.

Earnings Whispers

Our proven model does not conclusively show that Lorillard is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as shown below.

Zacks ESP:The Earnings ESP is 0.00%.

Zacks Rank #3 (Hold): Lorillard’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the consumer staples sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Flower Foods Inc (FLO - Snapshot Report) with Earnings ESP of +4.88% and a Zacks Rank #1 (Strong Buy)

Kraft Foods Group, Inc. (KRFT - Analyst Report) with Earnings ESP of +3.13% and a Zacks Rank #2 (Buy)

Molson Coors Brewing Co. (TAP - Analyst Report) with Earnings ESP of +2.86% and a Zacks Rank #3 (Hold)

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