NEW YORK (TheStreet) -- Lowe's (LOW), the world's second-largest home-improvement products retailer, will report first-quarter earnings Wednesday before the opening bell. And like its motto, "Never stop improving," investors are hoping that Lowe's will continue its upward climb on a better-than-expected report. But will it happen?
Last week's report showing that U.S. retails sales for the month of April were flat, missing the expected 0.2% growth, shouldn't be ignored. And when considering the report's upward revision of the March data, showing a 1.1% gain versus the prior reported 0.9% gain, the April month-over-month numbers appear even worse, adding risk to retail stocks. Still, all retailers are not created equal.
In the case of Lowe's, what's more important to consider are the gains the stock can yield with relatively low risk, given the company's recent moves. Lowe's has closed poor-performing stores, is improving its merchandising, and is actively looking for ways to make the shopping experience better.
In that regard, despite the downbeat April retail data, the Mooresville, N.C.-based retailer may have hit on a formula that will lead it to outperform, regardless of what the broader retail numbers may reveal in the months and quarters ahead.
Why the confidence? Lowe's has been through periods of weak retail spending before, and in this case, it's more important to consider the extent to which the U.S. housing market will continue to rebound. Analysts have forecast modest-to-higher home sales in the quarters ahead, which should benefit Lowe's.