Can Home Depot's SRS Distribution Boost Pro Sales Momentum in Q2?

The Home Depot, Inc.’s HD strategy to strengthen its ties with professional contractors took a significant step forward with its 2024 acquisition of SRS Distribution, which added verticals such as roofing, landscaping and pool supplies. SRS has become a growth driver, creating cross-selling opportunities and expanding the Pro-focused product selection. Building on this momentum, SRS recently announced plans to acquire GMS Inc., a leading distributor of specialty building materials.

The GMS acquisition, adding verticals like drywall, ceilings and steel framing, is set to accelerate SRS' vision and broaden its distribution footprint across North America. While the operational impact on second-quarter fiscal 2025 sales would be negligible due to the timing, the announcement underscores Home Depot’s confidence in the SRS platform’s ability to drive Pro growth.

Pro customers have proven more resilient than DIY shoppers, and success in this segment is increasingly shaping the company’s performance. With SRS and GMS together operating 1,200-plus locations supported by more than 8,000 trucks, the platform offers enhanced fulfillment and service reliability. Contractors now gain broader access to essential building materials with streamlined delivery, reinforcing Home Depot’s role as a go-to partner for complex projects.

The integration also has strategic implications beyond product selection. Using SRS to enhance Home Depot’s trade credit program and improving operational efficiency are initial signs of progress. As management points out, these synergies boost confidence that the GMS addition will continue to build momentum. The second quarter may show early signs of whether the Pro segment is gaining traction under this expanded platform. (Read More: Home Depot Nears Q2 Earnings Release: Is Now the Right Time to Invest?)

What Latest Metrics Say About HD Ahead of Q2 Earnings

The Zacks Consensus Estimate for Home Depot’s second-quarter sales implies year-over-year growth of 5.4%, while the same for earnings per share suggests a marginal increase of 0.9%.
 

Home Depot shares have risen 10% in the past year compared with the industry’s growth of 6.6%. HD has comfortably outperformed key peers, such as Lowe’s Companies Inc. LOW and Floor & Decor Holdings, Inc. FND. During the same period, Lowe’s shares have risen 3.6%, while Floor & Decor Holdings has fallen 22.2%. 

From a valuation standpoint, Home Depot trades at a forward price-to-sales ratio of 2.36, higher than the industry’s 1.67. HD carries a Value Score of D. 

This premium positioning is especially notable when compared to peers like Lowe’s (with a forward 12-month P/S ratio of 1.65) and Floor & Decor (1.80).
 

Home Depot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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