How Home Depot's GMS Acquisition Redefines Its Pro Contractor Reach

The Home Depot, Inc.’s HD acquisition of GMS marks a pivotal step in its push to build a dominant Pro distribution ecosystem. Following last year’s purchase of SRS Distribution, the addition of GMS extends the reach of Home Depot into new verticals such as drywall, ceilings and steel framing. Management highlighted that GMS brings differentiated capabilities, a broad distribution footprint and established customer relationships, positioning the combined platform as a more complete partner for Pro contractors.

On the second-quarter fiscal 2025 earnings call, management hinted that SRS had already exceeded expectations and was driving revenue synergies across Home Depot’s professional channels. Now, with GMS folded in, SRS expands to more than 1,200 locations supported by more than 3,500 associates and about 8,000 trucks, enabling tens of thousands of jobsite deliveries daily. That level of distribution density creates more opportunities to serve residential and commercial Pros with speed and reliability.

The integration of GMS expands the distribution footprint across the United States and Canada. Both GMS and SRS operate on single ERP systems and emphasize branch-level execution, which should ease integration and accelerate cross-selling. Home Depot’s CEO described drywall and ceiling products as adjacent and complementary to SRS’ roofing and landscaping verticals.

The $5.5 billion GMS deal reflects Home Depot’s ambition to capture a larger share of complex Pro projects, a segment that remains underpenetrated. By combining scale, service and specialized assortments under one roof, the company is reshaping its distribution model to serve contractors end to end.

What the Latest Metrics Say About Home Depot

Home Depot shares have risen 12.1% in the past year compared with the industry’s growth of 11%. 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 8.8%, while Floor & Decor Holdings has fallen 18.5%. 
 

From a valuation standpoint, Home Depot trades at a forward price-to-sales ratio of 2.45, higher than the industry’s 1.77. 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 1.72) and Floor & Decor (1.87).

The Zacks Consensus Estimate for Home Depot’s current financial-year sales implies year-over-year growth of 2.9%, while the same for earnings per share suggests a decline of 1.4%.
 

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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