We expect technology company Google Inc. (GOOGL) to beat expectations when it reports second-quarter 2014 results on Jul 17.
Why a Likely Positive Surprise?
Our proven model shows that Google is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.36%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank: Google has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Google’s Zacks Rank #3 and a +1.36% ESP makes us reasonably confident in looking for a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Google’s new products, its increasing share in the mobile market, solid execution and cost control measures are expected to generate a positive earnings surprise in the upcoming quarter.
Additionally, Google’s success in the tablet market and diversification of its business into a fast-growing e-Commerce segment (both retail and payment platforms), focus on the wearables, its Nexus and Chromebook platforms and new offerings are quite encouraging. We believe Google’s growth strategies and solid execution will help the company to continue on the growth path.
Other Stocks to Consider
Google is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies:
Gentex Corp. (GNTX), with anEarningsESP of +2.08% and a Zacks Rank #1 (Strong Buy).
AmSurg Corp. (AMSG), with an Earnings ESP of +3.13% and a Zacks Rank #1.
Kirby Corporation (KEX), with an Earnings ESP of +3.10% and a Zacks Rank #1.
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