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NetApp Inc. (NTAP - Snapshot Report) is set to report fourth quarter 2013 results on May 21, after market closes. Last quarter it posted a 24.4% positive surprise with a trailing four-quarter average positive surprise of 10.4%. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Though NetApp was affected by the sluggish macro environment, the company's third quarter 2013 revenues grew 4.1% from the year-ago period and were at the higher end of management’s guidance. The improvement was attributable to solid performances by Software and Services, partially offset by Product revenues. Its ONTAP family of storage devices observed a good demand ramp.

Favorable product mix led to gross margin expansion.

But the company remains cautious about its fourth quarter results given lingering macroeconomic environment; contraction in data storage spending and pricing pressure.

Earnings Whispers?

Our proven model does not conclusively show that NetApp will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings 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 you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 54 cents. Hence, the difference is 0.00%.

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

We caution against stocks with Zacks Ranks #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

Investors could consider other stocks that have positive ESP and Zacks Rank:

SanDisk Inc. (SNDK - Analyst Report), with Earnings ESP of +1.16% and Zacks Rank #1 (Strong Buy)

Pega Systems Inc. (PEGA - Snapshot Report), with Earnings ESP of +14.29% and Zacks Rank #1 (Strong Buy)

Advent Software Inc. (ADVS - Snapshot Report), with Earnings ESP of +7.69% and Zacks Rank #2 (Buy).

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