Building Products - Review of Home Depot Results; HVAC Pro Vertical Review

Research evidence excerpt

Building Products - Review of Home Depot Results; HVAC Pro Vertical Review

been completed and pointed to a $100B addressable

market for HVAC distribution. The company looks to make HVAC the 5th vertical of SRS

and expects to make modest bolt on acquisitions to expand its geographic presence.

We will continue to watch to additional moves by HD in this space.

Outlook for 2026 Unchanged for HD and SRS. The company maintained its guide

of SSS flat to up 2% as market dynamics so far this year appear similar to last year.

SRS is still expected to see MSD% organic sales growth with 40-50 new SRS locations

anticipated to open.

Results Overview. HD reported 1Q26 total sales growth of 4.8% y/y with company-

wide SSS up 0.6% and US SSS up 0.4%. The North and West divisions experienced

positive comps along with Mexico while Canada saw declines. Comp average ticket

increased 2.2% while comp average transactions declined 1.3%. Big ticket (>$1,000)

comp sales increased 0.8%. Pro sales also posted positive comp sales while DIY

declined. Additional details on the quarter are noted in the report by Scot Ciccarelli:

HD - Penalizing HD for higher rates given multi-decade low housing turn/fin projects is

Double Jeopardy

Above Trend Product Categories. Home Depot (HD, Buy, Ciccarelli) stated that 9 of

their 16 merchandising categories posted positive comps including Power, Electrical,

Storage, Indoor Garden, Hardware, Plumbing, Bath, Kitchen, and Paint. Related

companies under our coverage include: Plumbing - Fortune Brands (FBIN, Hold),

Masco (MAS, Buy), Ferguson (FERG, Buy), Outdoor Garden - SiteOne Landscape

Supply (SITE, Buy), Paint - Masco, Roofing - QXO (QXO, Buy), Owens Corning (OC,

Hold) and Insulation - Owens Corning, TopBuild (BLD, Hold) and Installed Building