Lowe's (NYSE:LOW) will announce its fourth-quarter earnings numbers before the market opens on Wednesday, Feb. 28. As much as the company would like to stand apart from rival Home Depot (NYSE:HD), its operating metrics likely will be judged against the industry leader's strong results.

With that in mind, here's what investors will be looking for from the home-improvement industry's second-largest retailer.

A cart sitting in a home-improvement aisle.

Image source: Getty Images.

Sales growth

Sales growth ticked up to a 5.7% rate in the most recent quarter, in part thanks to hurricane-related rebuilding efforts. There's a good chance that this trend lifted Lowe's results in the fourth quarter, too. Home Depot recently announced surprisingly strong comps for the period, indicating that the home-improvement market is growing at a healthy pace.

Don't expect Lowe's to match or exceed its larger rival's 7% comps spike for the 2017 year, though. CEO Robert Niblock and his team are projecting just 3.5% gains, and as recently as late November, the business was running just slightly ahead of that modest result.

Customer-traffic numbers will be critical to watch, since Lowe's has launched several initiatives aimed at filling its aisles with shoppers. Yet despite longer store hours, the metric slowed to a 1% rate in the third quarter from 3%. Home Depot's comparable figure ticked down in the fourth quarter but remained robust, at 2%. We'll find out on Wednesday if Lowe's customer-traffic figure drifted lower, as well.

Bigger profits

In another contrast to Home Depot, Lowe's declined to raise its profit forecast following its third-quarter earnings report in late November. That means investors are still looking for earnings to rise to about $4.25 per share, which would mark a 23% spike over the prior year.

Looking deeper into the finances, Lowe's likely will take modest steps toward closing the large gap between itself and the market leader this week. Operating profit margin should rise by as much as a full percentage point, to reach about 10% of sales compared to Home Depot's 14.5%. Return on invested capital is marching higher, too, rising to 16% in 2016 from 14% two years before. Again, Lowe's dramatically underperforms its peer on this score, but that's also true for almost all other public companies.

LOW Operating Margin (TTM) Chart

LOW Operating Margin (TTM) data by YCharts.

A modest outlook?

Assuming the retailer stays close to its latest forecast, shareholders might be disappointed in the broader 2017 performance. Comps will have risen by just 3.5%, after all, which is the same rate that Niblock and his team originally projected -- even though hurricanes and a strong housing market lifted Home Depot's results from its initial 4.6% target to 6.9% by the end of the year. Lowe's is on pace to open a smaller number of new stores than it first projected, too, while profitability expands by slightly less than executives had hoped it would a year ago.

For 2018, Home Depot issued an aggressive forecast that implies the housing market will continue to support robust growth in home-improvement spending. Unless its business sped up significantly over the past few months, though, Lowe's outlook will probably trail the 5% comps gain and the 14.5% profit margin that Home Depot expects to book for the year.

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