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Reece Ltd REH

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Stock XASX Rating as of
A$27.49 +0.35 (1.29%)
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Company Report

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Reece: Strategic Continuity Confirmed on Leadership Transition

Esther Holloway

Our AUD 13.50 fair value estimate for no-moat Reece stands on the latest leadership transition update, with shares screening as significantly overvalued. As previously announced, CEO Peter Wilson will take on the additional role of chair following Tim Poole's retirement in November 2024. Reece has announced that Sasha Nikolic, currently CEO of Reece’s US business, will step up into the role of group president and managing director. Nikolic will assume responsibility for strategy implementation and performance, with input from Peter Wilson.

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Price vs Fair Value

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REH is trading at a 104% premium.
Price
A$27.49
Fair Value
A$95.10
Uncertainty
High
1-Star Price
A$48.57
5-Star Price
A$5.60
Economic Moat
Hsxpl
Capital Allocation
Wrcl

Bulls Say, Bears Say

Bulls

Demand for new houses and aging housing stock in Reece’s key geographies supports demand for plumbing products

Bears

Reece’s US acquisition strategy has eroded group ROIC. For further acquisitions, a variety of factors may destroy shareholder value, such as unfavorable deal terms, integration issues, and relative underperformance.

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Trading Information

Previous Close Price
A$27.14
Day Range
A$27.27–27.70
52-Week Range
A$17.10–29.33
Bid/Ask
A$27.10 / A$27.52
Market Cap
A$17.76 Bil
Volume/Avg
304,202 / 515,807

Key Statistics

Price/Earnings (Normalized)
41.19
Price/Sales
1.98
Dividend Yield (Trailing)
0.91%
Dividend Yield (Forward)
0.91%
Total Yield
0.91%

Company Profile

Reece is an Australian distributor of plumbing supplies and bathroom products, with businesses in Australia, New Zealand, and the United States. Reece Australia holds Australia’s largest range of individual plumbing stock-keeping units, supporting plumbing needs for general plumbing, bathrooms, kitchens, heating and air conditioning, irrigation, pools, commercial and government projects, and fire services.In the Australia and New Zealand markets, Reece’s professional, or trade, customers are mostly small to medium plumbing businesses working in the areas of residential repairs, renovations, or new home builds.The US business principally serves plumbers working on commercial and residential construction projects and has a network of almost 250 stores in the southern Sunbelt states.
Sector
Industrials
Industry
Industrial Distribution
Stock Style Box
Large Growth
Total Number of Employees
3,025
Website
https://www.reecegroup.com.au

Competitors

Valuation

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Metric
REH
FERG
FBU
Price/Earnings (Normalized)
 41.1922.7417.45
Price/Book Value
 4.848.140.85
Price/Sales
 1.981.520.35
Price/Cash Flow
 18.5619.716.42
Price/Earnings
REH
FERG
FBU

Financial Strength

Metric
REH
FERG
FBU
Quick Ratio
 1.220.780.64
Current Ratio
 2.341.801.69
Interest Coverage
 7.3313.440.39
Quick Ratio
REH
FERG
FBU

Profitability

Metric
REH
FERG
FBU
Return on Assets (Normalized)
 6.72%12.20%0.40%
Return on Equity (Normalized)
 12.62%37.79%1.02%
Return on Invested Capital (Normalized)
 9.46%19.98%0.46%
Return on Assets
REH
FERG
FBU
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