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Time for Lowe's to Improve

Stocks in this article: LOW HD WMT WY LPX

Along similar lines, the post-Hurricane Sandy boom benefited not just Home Depot but also lumber manufacturers Weyerhaeuser (WY) and Louisiana Pacific (LPX) with sustaining momentum. For Lowe's, however, that doesn't appear to have been the case.

Where Lowe's deserve credit is on the profit side. The company posted earnings excluding items of 49 cents per share, which is an 11% year-over-year improvement. Despite the miss on revenue, it was nonetheless encouraging Lowe's was able to advance both gross margin and operating margin by 10 basis points and 25 basis points, respectively -- enough to beat estimates.

All of that said, I don't believe it's time for investors take Lowe's to the proverbial woodshed -- at least not yet. I still like the company's management and I do see opportunities where Lowe's can turn things around.

For instance, it's been no secret that merchandising strategies have impeded the Lowe's progress, adding to Home Depot's advantage.

To that end, earlier this year Lowe's added Michael Jones as chief merchandising officer. With better attention to detail, which should drive in-store traffic and raise customer satisfaction, Lowe's should be able to narrow the gap. But it's not going to happen overnight.

Besides, this is just one part of the many problems the company must repair. Management still has deficits with staffing and operational efficiencies to fix. As bad as things may appear for Lowe's, investors should thank their lucky stars Lowe's is not as bad as JC Penney (JCP).

It's not a glowing endorsement. But I do want to keep my Lowe's analysis in the proper context. Despite these struggles, I still believe this stock should be bought and that Lowe's will overcome its challenges.

It's just a matter of time. But it's just going to require considerably more patience than investors may be willing to spend.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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