Can Home Depot's Pro Expansion Offset Today's Frozen Housing Market?

The Home Depot, Inc. HD is leaning harder on professional customers as housing affordability and low turnover continue to suppress larger remodeling projects. That strategy is helping the retailer grow even without a broad housing recovery.

The question is how far Pro momentum can carry the business. Second-quarter fiscal 2026 results show meaningful support from SRS, specialty distribution and cross-selling, but softer traffic and restrained big-ticket demand remain clear limits.

Image Source: Zacks Investment Research

Pro Investments Are Broadening HD's Growth Base

Home Depot's Pro business posted positive comparable sales in the second quarter and outperformed DIY, with gains across all Pro cohorts. Pro-focused categories including decking, dimensional lumber, pipe and fittings, fasteners, hand tools and concrete also grew. Big-ticket transactions above $1,000 increased 2.4% year over year, improving from 0.8% growth in the first quarter.

SRS is becoming a larger piece of that effort. It posted comparable sales above the company average and positive comps across all verticals, while management expects mid-single-digit organic sales growth in fiscal 2026. The Mingledorff's acquisition added HVAC as a fifth SRS operating line, and the GMS platform broadened the product catalog available to professional customers.

Cross-Selling and Delivery Add More Pro Reach

Integration is creating more selling opportunities across Home Depot's network. Over the 12 months through the second quarter, 90% of stores closed at least one SRS sale through QuoteCenter. The combined offering generated incremental sales from homebuilders, commercial customers and remodelers.

Home Depot plans to add 40-50 SRS branches in fiscal 2026 alongside about 15 new retail stores. Digital execution is helping support the broader model as well. Online sales rose 11% in the second quarter, marking a fifth consecutive quarter of double-digit growth, while faster parcel and big-and-bulky delivery improved service levels for both DIY and Pro customers.

Housing Weakness Still Caps the Upside

The housing backdrop remains the central constraint. Comparable customer transactions declined 1% year over year in the second quarter, while comparable average ticket increased 2.8%. Management said housing turnover has remained at historically low levels for four years, with no sign of an inflection point, and customers continue to favor smaller repair and maintenance projects.

That pressure is visible across the industry. Lowe's Companies, Inc. LOW reported a 0.2% comparable-sales increase in its second quarter, driven by Pro, home services and online growth but partly offset by persistent discretionary DIY pressure. Builders FirstSource, Inc. BLDR reported an 8.8% decline in second-quarter net sales, citing a lower housing-starts environment and related headwinds.

Can Pro Expansion Offset the Frozen Market?

Home Depot's Pro expansion is cushioning the housing slowdown, but current results do not show that it can fully replace demand lost to weak turnover and muted large-project activity. The company still delivered 5.7% sales growth and a 1.7% comparable-sales increase in the second quarter, then reaffirmed fiscal 2026 guidance for total sales growth of 2.5-4.5% and comparable sales ranging from flat to 2%.

The stock currently carries a Zacks Rank #3 (Hold). It also has a VGM Score of B, Growth Score of B and Momentum Score of A, while its Value Score of C is less favorable. The Style Scores point to better growth and momentum characteristics than value, while the Zacks Rank keeps the near-term setup balanced. For now, Pro gains, specialty distribution and cross-selling provide support, but a broader housing recovery would still be important for a stronger return of large discretionary projects.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

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

Zacks Investment Research