Reece Ltd
REH: XASX (AUS)
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
A$22.90 | Cvsy | Pbjzl |
Reece: Initiating Coverage; U.S. Expansion Strategy Draining Returns
We initiate research coverage of Reece, with a fair value estimate of AUD 13.20 per share and a no-moat rating. Shares currently trade at about a 50% premium to fair value, on a P/E ratio of 36 times, and offer a dividend yield of 1%, fully franked. We apply a weighted average cost of capital of 8.4% to our estimates of free cash flow to the firm.