Prologis Inc. (NYSE: PLD ) – the industrial real estate investment trust (REIT) – is slated to report its second-quarter 2014 results on Jul 22, before the opening bell. Last quarter, it posted a 2.38% positive surprise.

Also, the company has reported an average positive earnings surprise of 4.22% over the past four quarters. Let’s see how things are shaping up for this announcement.

Prologis has been capitalizing on growth opportunities across the globe, with notable investments in China, Europe, Japan and Mexico in the second quarter of 2014. Amid a larger customer base, rise in e-Commerce application and supply chain consolidation, there is an increasing demand for high-quality logistics facilities in these markets. But there is a still-gradual pickup in new construction starts that is resulting in significant rise in rents in many of its markets. And with the capacity to offer modern distribution facilities in strategic infill locations around the globe, Prologis is well leveraging on this demand supply imbalance.

However, given its international presence, Prologis often faces unfavorable foreign currency movements and other economic fluctuations that impair its top-line growth. Notably, in 2013, the company generated approximately 30.1% of its revenue from operations outside the U.S. Therefore, state of affairs and developments associated with international operations have a notable impact on its performance.

In April, Prologis came up with better-than-expected results for the first quarter of 2014. The company reported core FFO per share of 43 cents, which was a penny above the Zacks Consensus Estimate and 3 cents ahead of the year-ago quarter figure. While total revenue declined from the year-ago quarter, it managed to beat the Zacks Consensus Estimate. The company has also narrowed its 2014 guidance.

Our proven model does not conclusively show that Prologis will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zero Zacks ESP:   Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents per share. Hence, the difference is 0.00%.

Zacks Rank #3: Prologis’ Zacks Rank #3 (Hold) when combined with a 0.00% Earnings ESP (Expected Surprise Prediction) makes surprise prediction difficult.

Notably, 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

You could consider other stocks in the REIT sector that have both a positive Earnings ESP and a favorable Zacks Rank:

SL Green Realty Corp. (NYSE: SLG ) has an Earnings ESP of +0.70% with Zacks Rank #2 (Buy). The company will report its second-quarter 2014 results on July 23.

Avalonbay Communities Inc. (NYSE: AVB ) has an Earnings ESP of +0.60% with Zacks Rank #2. The company will report its second-quarter 2014 results on July 23.

American Capital Agency Corp. (NASDAQ: AGNC ) has an Earnings ESP of +6.06% with Zacks Rank #2. The company will report its second-quarter 2014 results on July 28.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMER CAP AGENCY (NASDAQ: AGNC ): Free Stock Analysis Report

AVALONBAY CMMTY (NYSE: AVB ): Free Stock Analysis Report

PROLOGIS INC (NYSE: PLD ): Free Stock Analysis Report