Sprint Corporation (S – Analyst Report) – a leading telecom operator in the U.S. –is scheduled to report third-quarter fiscal 2015 financial numbers on Jan 26, before the market opens.

Last quarter, the company delivered a 44.44% negative earnings surprise. Moreover, the company’s bottom line has surpassed the Zacks Consensus Estimate in only two of the past four quarters, with an average miss of 3.70%. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that the company is likely to beat the Zacks Consensus Estimate because it has the right combination of two key ingredients.

Zacks ESP: Sprint has an earnings ESP of +11.11%. This is because the Most Accurate estimate stands at a loss of 24 cents while the Zacks Consensus Estimate is pegged at a loss of 27 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Sprint has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating bottom-line estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Sprint’s Zacks Rank #3 and +11.11% ESP makes us confident of a better-than-expected bottom line at the company.

What is Driving Positive Expectations?

Sprint has signed a deal with the newly formed Mobile Leasing Solutions, LLC, which has been created by a group of equity investors including Sprint’s majority owner and parent company, Softbank Group. Roughly $1.1 billion cash infusion occurred through this sale and lease-back deal. Notably, Sprint anticipates sale of 2.5 million leased devices with a projected book value of $1.3 billion to Mobile Leasing Solutions. The lease-back deal is intended to reduce one of Sprint’s biggest expenses – the cost of buying millions of new devices. This in turn will help Sprint lower equipment costs and free up much-needed resources to focus on new growth opportunities.