Home Depot Expands Pro Market With GMS and SRS Pairing

The Home Depot, Inc. HD has broadened its professional market reach through the acquisition of GMS by its SRS Distribution business. GMS is a prominent distributor of specialty building products, including drywall, ceilings and steel framing, which are essential for complex remodeling and new construction. This integration enables Home Depot to leverage GMS' specialized product categories and customer relationships, enhancing its multi-category distribution model.

This pairing is significant because it brings differentiated customer relationships and product categories that are highly complementary to the existing SRS business. By combining GMS' specialty distribution with Home Depot's retail reach and SRS' roofing strength, the company is positioning itself as a one-stop shop for complex professional projects. The acquisition has contributed roughly $900 million in sales during just eight weeks of the third quarter.

For fiscal 2025, GMS is expected to contribute about $2 billion in incremental sales to Home Depot's top line. This expansion into technical specialty trade categories effectively broadens the company's total addressable market within the professional segment. By focusing on specialized building products, the company can better serve professional contractors working on intricate builds that require reliable material delivery and advanced project planning tools.

With more than 1,200 SRS locations in the network, the addition of GMS expands Home Depot’s participation in specialty building products distribution and increases its ability to serve professional customers through a wider set of trade categories tied to construction-related spending.

What the Latest Metrics Say About Home Depot

Home Depot, which competes with Floor & Decor Holdings, Inc. FND and Lowe's Companies, Inc. LOW, has seen its shares fall 10.1% in the past year compared with the industry’s decline of 15.7%. While shares of Floor & Decor Holdings have declined 37.2%, Lowe’s has fallen 0.9% in the said period.
 

From a valuation standpoint, Home Depot trades at a forward price-to-earnings ratio of 23.24, higher than the industry’s 21.14. HD carries a Value Score of F. Home Depot is trading at a discount to Floor & Decor Holdings (with a forward 12-month P/E ratio of 29.43) but at a premium to Lowe’s (18.89). 
 

The Zacks Consensus Estimate for Home Depot’s current financial-year sales implies year-over-year growth of 3.2%, while the same for earnings per share suggests a decline of 4.8%.
 

Home Depot currently carries a Zacks Rank #5 (Strong Sell).

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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