Lowe's (NYSE:LOW) investors had a great 2020. The stock beat a rallying market last year and managed to outpace bigger home-improvement giants like Home Depot (NYSE:HD).

That surge was powered by strong sales growth and improving profitability through late September. But competitors worked hard to win back market share during the holiday season so they could start 2021 on stronger footing.

With that big picture in mind, let's look at the key metrics that will matter to shareholders in Lowe's upcoming earnings report on Feb. 24.

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Market-share updates

Most national retailers who sell home furnishings notched record growth during the early phases of the pandemic. Lowe's results kept it near the top of the industry, with comparable-store sales rising over 30% in Q3 and soaring by 35% in Q2. Home Depot's comparable metrics were 25% in each period.

Home Depot fixed a few inventory shortages heading into the holiday shopping push, though, meaning there's a good chance the retailing giant closed the competitive gap in late 2020. At the same time, Lowe's issued a wide potential outlook range for Q4, with sales growth landing anywhere between 15% and 20%. The higher figure likely translates into more market-share wins against Home Depot, which announces its results a day earlier. Coming up short might mean Home Depot has clawed back some of the momentum it lost earlier in the year.

Pricing power

Lowe's still couldn't match Home Depot when it comes to profitability in recent quarters. Gross profit margin held steady through Q3 and operating margin has been stuck at below 10% of sales compared with Home Depot's steady result over 14%.

LOW OPERATING MARGIN (TTM) DATA BY YCHARTS

Don't expect that figure to start spiking this week. In fact, CEO Marvin Ellison and his team said in November that spending on the business will keep profitability at about 9% of sales this year. The good news is that its surging revenue base will mean earnings should rise to about $8.70 per share in 2020 compared with $5.75 per share a year earlier.

The 2021 outlook

Lowe's and Home Depot will each comment on the strength of the housing industry this week, and that forecast might determine whether the stocks post another year of strong growth ahead. Both companies were cautiously optimistic back in November, with Home Depot saying its customers are prioritizing home-improvement spending despite rocky economies and rising unemployment rates. "The home has never been more important," CEO Craig Menear explained.

Lowe's will likely have its own positive comments about customers' plans for home upgrade projects as the pandemic enters its second year. But a lot will depend on how well it can execute against competitive pushes from Home Depot and e-commerce focused rivals like Wayfair over the peak spring selling season. In fact, that Q1 forecast might be the single most-watched metric in Wednesday's report and could set the tone for the stock this year.

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