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We expect aerospace and defense company Alliant Techsystems (ATK - Analyst Report) to beat expectations when it reports fourth quarter fiscal 2013 results on May 2.

Why a Likely Positive Surprise?

Our proven model indicates that Alliant Techsystems 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 +9.14%. This is a leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): The stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should be avoided going into an earnings announcement.  

The combination of Alliant Techsystems’s Zacks Rank #3 (Hold) and +9.14% ESP makes us confident of an earnings beat on May 2.

What is Driving Better-than-Expected Earnings?

Alliant Techsystems reported positive earnings surprises in the last eight quarters. We expect the trend to continue in the to-be-reported quarter as well. The results would be driven by ATK’s solid performance in its core markets and better management of its expenses.

In addition, the diverse revenue stream of the company, its competitiveness edge and operational efficiency will further strengthen its performance. This will enable ATK to meet its guidance set earlier.

Other Stocks to Consider

Other companies related to the aerospace and defense industry worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter, include the following:

Exelis Inc. (XLS - Snapshot Report) has earnings ESP of +7.69% and carries a Zacks Rank #3 (Hold).

Spirit AeroSystems Holdings Inc. (SPR - Snapshot Report) has earnings ESP of +4.26% and carries a Zacks Rank #3 (Hold).

TransDigm Group Incorporated (TDG - Analyst Report) has earnings ESP of +3.05% and carries a Zacks Rank #3 (Hold).

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