Can SRS and GMS Cement Home Depot's Hold on the Pro Market?

The Pro market has long served as a cornerstone of The Home Depot, Inc.’s HD business model, driving consistent growth and profitability. By investing in technology to enhance productivity, building out its Pro ecosystem to address complex customer needs and improving delivery speed for every customer, HD looks to reinforce its position and gain market share. Meanwhile, acquisitions like SRS and GMS deepen Pro relationships and broaden specialty capabilities. 

The $18.25-billion SRS Distribution acquisition bolsters the company’s relationships with professional contractors.  SRS is a major distributor in the residential specialty trade, catering to professional roofers, landscapers and pool contractors. SRS has become a key growth driver, enabling cross-selling opportunities and expanding the company’s Pro-focused product range.

On the other hand, Home Depot’s $5.5 billion acquisition of GMS marks a significant advancement in its efforts to build a comprehensive Pro distribution ecosystem. GMS brings strong operational capabilities, an extensive distribution network and long-standing customer relationships, further positioning the business as a full-service partner for Pro contractors. This will bolster HD’s organic efforts to serve Pros on complex projects with a wider assortment of interior building products and services and expand fulfillment capabilities.

HD’s GMS acquisition is likely to add a highly complementary adjacent vertical to SRS' business with diverse capabilities, product categories and customer relationships, alongside expanding SRS' distribution footprint across the US and Canada. SRS will have a network of more than 1,200 locations and a sales operation of more than 3,500 associates. On its last earnings call, management cited that it has an additional 400 nodes of distribution to add to SRS’ network of 800. Both acquisitions are designed to provide a competitive edge and position the company for long-term success in the Pro segment.

HD’s Competition

Lowe's Companies, Inc. LOW and Floor & Decor Holdings, Inc. FND are the key companies competing with Home Depot.

Lowe’s is solidifying its Pro market leadership through the acquisitions of Artisan Design Group and Foundation Building Materials, broadening its presence in the professional market. As a core part of its Total Home strategy, Lowe’s continues to make investments in modernizing its network to boost its omnichannel capabilities. Strong operating momentum, disciplined cash flow and AI-driven initiatives are enhancing productivity and customer engagement. Balanced growth in Pro and DIY segments, supported by digital transformation and partnerships, underpins long-term potential.

Floor & Decor, together with its subsidiaries, is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces. The company also focuses on professional and commercial growth through specific programs, financial tools like credit solutions, and dedicated events like "PRO Appreciation Month. Floor & Decor's efforts for professionals include the PRO Premier Rewards program for discounts and loyalty points, design and other support services.

HD’s Price Performance, Valuation and Estimates

Shares of Home Depot have gained 0.6% year to date against the industry’s decline of 4.9%.

From a valuation standpoint, HD trades at a forward price-to-earnings ratio of 24.56X compared with the industry’s average of 20.49X.

The Zacks Consensus Estimate for HD’s fiscal 2025 earnings implies a year-over-year decline of 1.5% while that of fiscal 2026 shows growth of 8.3%. The company’s EPS estimate for fiscal 2025 has been stable in the past 30 days while that of fiscal 2026 has moved south in the same time frame.

Home Depot stock currently carries a Zacks Rank #2 (Buy). 

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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