Changyou.com Limited CYOU is set to report first-quarter 2016 results on Apr 25. Last quarter, the company delivered a positive earnings surprise of 35.2%. Also, the company delivered positive earnings surprises in all the last four quarters, bringing the average to 83.23%.Let’s see how things are shaping up for this announcement.Factors to ConsiderChangyou has gained recognition for its offerings like Tian Long Ba Bu (TLBB). Also, the company unveiled TLBB 3D in 2014, which continues to drive demand. Newer games like Warframe and Tree of Savior are also expected to contribute to revenues in the to-be reported quarter. Additionally, the China-based game developer stepped up its R&D efforts to develop more innovative and user friendly mobile games while also cutting down on its expenses. These should help the company post decent results in the to-be reported quarter.However, Changyou is facing operational challenges from the ongoing transition. Also, sluggishness in the online game and advertising businesses hurt margins. Increasing competition from players like NetEase, Inc. NTES remains a concern.Nonetheless, a rebounding Chinese economy, a strong product portfolio and a favorable valuation are positives for the company.Earnings WhispersOur proven model does not conclusively show that Changyou is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.Zacks ESP: Changyou currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 55 cents.Zacks Rank: Changyou has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.Stocks to ConsiderHere are a couple of stocks that have a favorable rank and a positive ESP and are likely to post an earnings beat this quarter:Silicon Motion Technology Corp. SIMO with Earnings ESP of +7.27% and a Zacks Rank #1 (Strong Buy)Verisk Analytics, Inc. VRSK with Earnings ESP of +1.30% and a Zacks Rank #1.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 >>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 VERISK ANALYTIC (VRSK): Free Stock Analysis Report CHANGYOU.COM (CYOU): Free Stock Analysis Report NETEASE INC (NTES): Free Stock Analysis Report SILICON MOTION (SIMO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research