Zacks Earnings Preview: ARRIS Group, Guess, Pool Corporation and Terex.

CHICAGO -- Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes ARRIS Group (Nasdaq: ARRS), Guess? (NYSE: GES), POOL Corporation (Nasdaq: POOL) and Terex (NYSE: TEX). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Earnings Preview is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

We are entering a transition period for earnings season. The majority of large-cap companies have reported and most retailers won't start providing results for another 10 days. This doesn't mean that there won't be a lot of earnings reports (386 are confirmed for this week), but rather that daily earnings reports won't have as big of an impact on trading direction.

What could impact market direction next week is a large basket of economic data. December trade deficit numbers will be released on Tuesday. January retail sales and December business inventories are scheduled for publication on Wednesday. Thursday brings January import prices and industrial production, February New York and Philadelphia Fed indexes and weekly initial jobless claims. Then on Friday, January producer prices and housing starts plus the initial February University of Michigan consumer confidence survey will be released.

The large amount of data comes at time when the Dow is staying near a record high, but both gold and oil prices are rising. Fourth-quarter earnings season is shaping up to be fairly similar to the third-quarter earnings season in terms of growth, though the number of negative earnings surprises is higher. (Multiple financial, transportation and utility companies have missed brokerage analysts' forecasts.) Plus, the downward drift in full-year earnings estimates continues. In other words, there are clouds in the sky.

Companies That Could Surprise During the Week of Feb 12 - 16

Networking solutions provider ARRIS Group (Nasdaq: ARRS) made headlines last month for its proposed acquisition of digital video and IPTV hardware provider TANDBERG Television. A couple of brokerage analysts also believe ARRS' fourth-quarter earnings could also make headlines. Two analysts have raised their forecasts over the past 30 days, causing the consensus estimate to rise by a penny to 26 cents per share. The Most Recent Consensus is more bullish at 27 cents per share. ARRS has topped expectations for two consecutive quarters, though the company's first-quarter results were below analysts' projections. ARRIS Group is scheduled to report on Thursday, Feb 15, after the close of trading.

Guess? (NYSE: GES) is unlikely to be a stranger to regular readers of Zacks.com. Earnings estimates on the apparel maker and retailer were raised several times in 2006 thanks to good sales growth domestically and even stronger growth abroad. This year, it may be more of the same. GES recently revised its fourth-quarter profit guidance to a range of 91 to 93 cents per share; previously, the company had guided for profits of 65 to 67 cents per share. (The consensus estimate now sits at 92 cents per share.) GES has topped expectations for 13 consecutive quarters. Guess? is scheduled to report on Wednesday, Feb 14, after the close of trading.

Construction and mining equipment maker Terex (NYSE: TEX) exceeded both second- and third-quarter earnings estimates by an average margin of 22 cents per share. While there is nothing to guarantee this magnitude of surprise again, the trend in estimate revisions is bullish. Over the past 30 days, the consensus estimate has risen by four cents to 93 cents per share. The Most Recent Consensus is more bullish at 97 cents per share. Terex is scheduled to report on Wednesday, Feb 14, after the close of trading.

Last month, the POOL Corporation (Nasdaq: POOL) warned that it would generate a fourth-quarter loss in the range of 8 to 10 cents per share; analysts had been expecting a one-cent loss. The company cited both flat sales growth and lower than expected vendor price incentives. On average, analysts now expect POOL to report a loss of eight cents, though the Most Recent Consensus is more bearish at nine cents per share. The company did miss third-quarter estimates by a penny. POOL is scheduled to report on Thursday, February 15, before the start of trading.

Want to turn earnings surprises into quick profits? Learn how by visiting http://at.zacks.com/?id=3206.

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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.8%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 143.6% annually (+4.8% vs. +11.8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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