Lowe’s Companies, Inc. (LOW - Analyst Report) appears strong as it embraces the earnings season with favorable stock price movement, a strong earnings surprise history, positive estimate revisions and strong fundamentals. Shares of this Mooresville, NC-based home improvement retailer have surged roughly 62.6% in the past one year, demonstrating its inherent strength.

Positive Earnings Surprise History

The company’s primary strength is its earnings surprise history. Of the trailing 10 quarters, Lowe’s has beaten the Zacks Consensus Estimate in 6 while breaking even in one. The average earnings beat over these 10 quarters comes to 3.5%, including 4.6% in the last reported quarter.

An improving job scenario and falling gasoline prices boosted consumers’ disposable income, allowing them to undertake home improvement projects; this aided Lowe’s to post better-than-expected results for the fourth quarter of fiscal 2014.

The company’s earnings of 46 cents per share were a couple of cents ahead of the Zacks Consensus Estimate and increased 48.4% from adjusted earnings of 31 cents reported in the prior-year quarter.

Consensus Estimate Moving Up

Following the fourth-quarter results, management now expects sales for fiscal 2015 to register year-over-year growth of 4.5–5% and envisions earnings of $3.29 per share. The encouraging outlook triggered an uptrend in the Zacks Consensus Estimate, which climbed 1.5% to $3.32 and 1.8% to $3.91 per share for fiscal 2015 and 2016, respectively, over the past 90 days.

Likely to Beat Earnings Estimates in Q1

Our proven model shows that Lowe’s is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Lowe’s Zacks Rank #3 (Hold) and ESP of +2.70% make us reasonably confident of a positive earnings beat. The company is expected to report first-quarter results on May 20, 2015.

Strong Fundamentals

Lowe’s remains well positioned to benefit from recovery in the housing market and merchandising initiatives. The company’s closure of its underperforming stores, along with its strategy of enhancing customer-shopping experience and merchandising transformation, is likely to generate incremental sales. The company is also focusing on expanding its e-commerce business and already has an online tool, “MyLowes”, to help consumers better manage their homes and other remodeling projects. The strong fundamentals, along with the company’s long-term earnings per share growth rate of 15.9%, could prove to be a solid bet for investors.

Stocks That Warrant a Look

Better-ranked stocks in the retail sector include Restoration Hardware Holdings, Inc. (RH - Snapshot Report), Tecnoglass Inc. (TGLS - Snapshot Report) and Tempur Sealy International Inc. (TPX - Snapshot Report). All these stocks carry a Zacks Rank #2 (Buy).