Is Home Depot’s Next Big Thing Already In Its Stores

Home Depot (HD) shares have lost 27% over the past year, including dividends, while the S&P 500 returned 17.1%. A $10,000 holding a year ago is worth about $7,310 today. Management says housing affordability still weighs on bigger home projects. One part of the company is growing anyway: SRS, a unit with its own branches that sells to professionals. Is SRS already paying off inside Home Depot's own stores?

Most Home Depot Stores Have Closed An SRS Sale

Partly. Most stores are already selling SRS products, but Home Depot does not report how much those sales add. In the 12 months before the company's August earnings call, 90% of Home Depot stores closed a sale through SRS. The company has also started to roll out the SRS purchase card for use in its stores.

SRS also beat the company average in the second quarter. Comparable sales, meaning sales at locations open at least a year, rose 1.7% company-wide in the second quarter of fiscal 2026. Management said SRS's comparable sales beat that average, with positive comparable sales in every line of business it serves.

The wider Pro business, Home Depot's sales to professional customers, points the same way. The Pro business posted positive comparable sales and outperformed sales to do-it-yourself shoppers. The harder question is how fast SRS is growing inside a company with $169.2 billion in yearly sales. Home Depot does not report SRS sales separately, so that pace cannot be measured directly.

Where Does SRS Fit In Home Depot's Growth Plans?

Management expects SRS to deliver mid-single-digit organic sales growth for fiscal 2026. Organic means growth that does not come from buying other businesses.

Most of the new locations will carry the SRS name. Home Depot plans to open 40 to 50 new SRS branches. The company plans about 15 new Home Depot stores.

Measured on sales, the stock price appears to assume slow growth continues. Home Depot trades at 1.9 times its yearly sales, against a ten-year low of 1.7 times. Its sales grew 3.1% a year on average over three years, below 5.8% for the S&P 500. SRS has to grow against that backdrop while the housing market stays stuck.

Can SRS Grow While Housing Stays Stuck?

Management's outlook says it can, but housing is giving SRS no help. On the August call, management said housing turnover has been low for four years. Turnover is the pace at which homes change hands. Management added that there is no sign of a turn at this moment.

The payoff from selling SRS products through the stores is also hard to size. On the same call, management was asked how cross-selling would build through the year. Management answered by describing the whole Pro business, without figures by quarter.

The third-quarter report, due in mid-November, is the next place to look. Watch for SRS to keep posting comparable sales above the company average there. Also watch for management to hold its mid-single-digit growth outlook for SRS.

A third quarter with SRS above the company average and housing still frozen would show SRS can grow in a weak market. If SRS slips back toward the company average, the stock is left waiting on housing, which shows no sign of turning.

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