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We expect North American energy firm Williams Companies Inc. (WMB - Analyst Report) to beat expectations when it reports first-quarter 2013 results after the closing bell on Tuesday, May 7.

Why a Likely Positive Surprise?

Our proven model shows that Williams 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 of 25 cents and the Zacks Consensus Estimate of 24 cents, stands at +4.17%. This is a meaningful and leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): The stocks with Zacks Rank #1 (Strong buy), #2 (Buy) and #3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered while going into an earnings announcement.

The combination of Williams’ Zacks Rank #3 (Hold) and +4.17% ESP makes us very confident in looking for a positive earnings beat on May 7.

What is Driving the Better-than-Expected Earnings?

Williams’ midstream assets, which are less sensitive to commodity prices, help the company to maintain a steady stream of revenue and cash flow even if natural gas prices stay low. Furthermore, Williams is poised to benefit from the rebound in industrial activity, which will include increased natural gas demand in the form of natural gas liquids.

In particular, the growth prospects for energy infrastructure all across North America remain exciting with the requirement to support producers in the growth of shale plays, especially in regions where there is a severe lack of facilities. This creates exciting opportunities for a pipeline firm like Williams, as it looks to capture the economic benefit of this trend.

Other Stocks to Consider

Here are some other companies that may be considered as our model shows they have the right ingredients to post an earnings beat this quarter:

SemGroup Corp. (SEMG - Snapshot Report), Earnings ESP of +22.50% and a Zacks Rank #1 (Strong Buy).

Atlas Resource Partners L.P .(ARP - Snapshot Report), Earnings ESP of +8.70% and Zacks Rank #2 (Buy).

Delek US Holdings, Inc. (DK - Snapshot Report), Earnings ESP of +0.86% and a Zacks Rank #3 (Hold).

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