Shares of Lowe's (LOW) have jumped in recent days on backs of a Trump presidency, but investors will be looking to see if the optimism is really warranted.
Jefferies analyst Daniel Binder noted there is some concern about U.S. same-store-sales, as larger items have been weak, with Binder reducing figures from 3% growth to between 2% and 2.5% for stores open at least a year. "This reflects some weakness in our field checks and what appeared to be choppy big ticket purchases in the home improvement industry this quarter," Binder wrote in a note to clients.
Like its competitor Home Depot (HD) , investors in the home improvement company have been emboldened on the prospects of what a Trump presidency will mean for Lowe's and the broader construction business. Over the past week, shares have rallied, gaining slightly less than 5%, albeit less than Home Depot.
Some of that variance may be due to concerns that Home Depot took share in the third-quarter in the home improvement market. It may have also seen less of an impact from big-ticket item weakness.
There's also the prospect that many on Wall Street consider Home Depot to be a better run company, with Oppenheimer analyst Brian Nagel calling it "more structurally sound" than Lowe's. Nagel has an outperform rating and a $80 price target on shares.
Analysts surveyed by Yahoo! Finance expect the company to earn 97 cents a share on $15.86 billion in sales.
These three ETFs may benefit if investors like what Lowe's has to say about the past 90 days and the housing market in general.
VanEck Vectors Retail ETF
Lowe's makes up 4.67% of the VanEck Vectors Retail ETF (RTH) which has $107.7 million in assets under management and has a 0.35% expense ratio.
Oppenheimer's Nagel believes that the sales weakness that occurred this past summer is less of a longer-term issue than some might fear. "In our view, any sales weakness that occurred late summer is likely more of a 'blip' than the beginning of a meaningful 'sales downshift' for the sector," Nagel wrote in a note to clients.
Despite that, the analyst trimmed his near-term revenue outlook for Lowe's, as well as Home Depot.
SPDR Homebuilders ETF
The SPDR Homebuilders ETF (XHB) has Lowe's make up 4.53% of its $967.5 million portfolio and charges investors a 0.35% expense ratio.
Jefferies's Binder thinks that even if the industry is coming up on tougher comparisons in 2017 because of the strength we've seen in recent quarters, shares are likely to stay relatively stable, as "this inflection point could keep shares sideways until we get through the toughest comparisons the next couple of quarters."
Binder rates Lowe's shares hold with an $81 price target.
iShares U.S. Home Construction ETF
The iShares U.S. Home Construction ETF (ITB) has Lowe's make up 3.28% of its $1.13 billion portfolio and charges investors a 0.43% expense ratio.