Is Home Depot Building the Strongest Multi-Category Pro Network?

Amid broader macroeconomic uncertainty and housing market pressure, The Home Depot, Inc. HD has been focused on creating a comprehensive multi-category Pro network by leveraging both digital tools and physical distribution hubs to address complex professional jobs. The aim is to be a one-stop solution that helps Pros plan projects, source materials and coordinate delivery through a single ecosystem.

A key pillar of this strategy is the expansion of digital tools built specifically for complex Pro projects that reduce the time and friction contractors face when bidding and executing large projects. Management has introduced two new tools to help contractors plan large projects. The first is a project planning tool that allows Pros to build and manage material lists, track orders and deliveries and coordinate multi-stage procurement. The second, the blueprint takeoff tool, uses artificial intelligence and proprietary algorithms to generate accurate material estimates from construction plans.

The acquisition of GMS further strengthens this ecosystem and complements SRS Distribution. By combining GMS’ specialty interior and structural distribution with Home Depot’s retail reach and SRS’ roofing strength, the company is broadening its ability to serve complex professional projects across trades. GMS contributed roughly $900 million in sales during just eight weeks of the third quarter and is expected to add about $2 billion in incremental sales to Home Depot’s top line in fiscal 2025.

The emphasis on the Pro segment is vital because it tends to be more resilient and generate higher transaction volumes than the DIY consumer. As the company continues to integrate these specialized businesses, it is focused on delivering a seamless experience for the professional customer base. This evolution into a high-scale professional network marks a pivotal shift in the company's operational model. The ongoing investment in this Pro ecosystem signals a commitment to becoming the primary partner for large-scale renovation and construction projects. Through these strategic efforts, the retailer is effectively bridging the gap between retail convenience and specialized wholesale distribution.

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 6.9% in the past year compared with the industry’s 11.7% decline. While shares of Floor & Decor Holdings have plunged 29.9%, Lowe’s has risen 8.6% in the same period.
 

From a valuation standpoint, Home Depot trades at a forward price-to-earnings ratio of 25.38, higher than the industry’s 23.19. HD carries a Value Score of D. Home Depot is trading at a discount to Floor & Decor Holdings (with a forward 12-month P/E ratio of 31.46) but at a premium to Lowe’s (21.38). 
 

The Zacks Consensus Estimate for Home Depot’s current financial-year sales implies year-over-year growth of 3.3%, while the same for earnings per share suggests a decline of 4.9%. For the next fiscal year, the consensus estimate indicates a 4.3% rise in sales and 4.4% growth in earnings.
 

Home Depot currently carries a Zacks Rank #4 (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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