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Reece Limited (AU:REH)
ASX:REH

Reece Limited (REH) AI Stock Analysis

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AU

Reece Limited

(Sydney:REH)

Rating:72Outperform
Price Target:
AU$18.00
▲(11.46%Upside)
Reece Limited's overall stock score is primarily driven by its robust financial performance and stable balance sheet, which provide a strong foundation. However, the technical analysis suggests mixed signals with potential resistance. The higher valuation and low dividend yield reduce attractiveness for value and income-focused investors.

Reece Limited (REH) vs. iShares MSCI Australia ETF (EWA)

Reece Limited Business Overview & Revenue Model

Company DescriptionReece Limited engages in the distribution of plumbing, bathroom, heating, ventilation, air-conditioning, waterworks, and refrigeration products in Australia, the United States, and New Zealand. The company also distributes irrigation and pools, fire, and kitchen products. It serves customers in the trade, retail, commercial, and infrastructure markets. It sells its products under the Reece, Viadux, Actrol, and Metaflex brands. The company was formerly known as Reece Australia Limited and changed its name to Reece Limited in November 2015. Reece Limited was founded in 1919 and is based in Cremorne, Australia.
How the Company Makes MoneyReece Limited generates its revenue primarily through the sale of plumbing, waterworks, and HVAC-R products via its extensive network of branches and showrooms. The company's key revenue streams include direct sales to trade professionals, contractors, and retail customers, as well as project-based sales for large commercial and industrial developments. Reece also benefits from its strategic partnerships with leading manufacturers and suppliers, which allows it to offer a wide range of high-quality products. Additionally, the company's expansion into the United States market has contributed to its revenue growth by tapping into a larger customer base. Reece's business model is supported by its strong supply chain management, customer service focus, and continual investment in digital platforms to enhance customer engagement and streamline operations.

Reece Limited Financial Statement Overview

Summary
Reece Limited demonstrates solid financial health with consistent revenue growth and strong margins. The balance sheet shows a stable financial position with reasonable leverage. While cash flow generation is positive, the decline in free cash flow warrants attention. Overall, the company appears well-positioned within its industry, balancing growth, profitability, and stability.
Income Statement
85
Very Positive
Reece Limited shows a consistent revenue growth trend over the years, with a 3.0% increase from 2023 to 2024. The gross profit margin stands at 28.6% for 2024, indicating solid profitability. The net profit margin improved slightly to 4.6%, reflecting effective cost management. EBIT and EBITDA margins are strong at 7.4% and 10.8%, respectively, pointing to robust operating efficiency.
Balance Sheet
78
Positive
The company's debt-to-equity ratio is moderate at 0.47, suggesting a balanced use of debt financing. The return on equity (ROE) increased to 10.8%, indicating improved profitability for shareholders. The equity ratio is 54.7%, highlighting a healthy capital structure with strong equity backing.
Cash Flow
72
Positive
Reece Limited's operating cash flow to net income ratio is 1.8, showing good cash generation relative to profits. However, the free cash flow declined by 16.3% in 2024, which could indicate increased capital expenditures or other investments. The free cash flow to net income ratio is 1.2, reflecting positive cash flow generation but with room for improvement.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
8.97B9.10B8.84B7.65B6.27B6.01B
Gross Profit
2.58B2.61B2.51B2.14B798.32M739.60M
EBIT
614.46M674.40M663.77M548.93M482.16M410.02M
EBITDA
874.36M983.92M944.01M835.99M698.22M655.83M
Net Income Common Stockholders
376.42M419.17M387.61M392.49M285.60M229.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
273.27M341.38M372.71M220.48M828.97M1.00B
Total Assets
7.28B7.09B6.92B6.61B6.12B6.34B
Total Debt
1.95B1.83B1.96B1.90B2.01B2.48B
Net Debt
1.68B1.49B1.59B1.68B1.18B1.48B
Total Liabilities
3.18B3.21B3.30B3.29B3.23B3.59B
Stockholders Equity
4.10B3.88B3.63B3.32B2.89B2.75B
Cash FlowFree Cash Flow
362.05M492.93M588.90M21.68M299.00M490.20M
Operating Cash Flow
629.12M750.90M766.38M221.79M371.64M600.96M
Investing Cash Flow
-284.45M-243.96M-309.52M-280.98M-67.92M-279.50M
Financing Cash Flow
-416.38M-538.80M-307.12M-574.66M-462.13M556.28M

Reece Limited Technical Analysis

Technical Analysis Sentiment
Positive
Last Price16.15
Price Trends
50DMA
15.73
Positive
100DMA
18.02
Negative
200DMA
21.67
Negative
Market Momentum
MACD
-0.07
Negative
RSI
56.77
Neutral
STOCH
61.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:REH, the sentiment is Positive. The current price of 16.15 is above the 20-day moving average (MA) of 16.04, above the 50-day MA of 15.73, and below the 200-day MA of 21.67, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 56.77 is Neutral, neither overbought nor oversold. The STOCH value of 61.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:REH.

Reece Limited Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUREH
72
Outperform
$10.21B27.129.84%1.55%0.23%-11.50%
66
Neutral
$4.49B12.285.32%248.53%4.08%-12.00%
$2.16B19.7710.01%1.60%
DE0BS
€989.63M-16.06%2.90%
DE3NR
€726.33M10.5918.01%5.98%
AUVNT
68
Neutral
AU$4.03B18.6936.67%4.14%7.56%16.00%
AUSGI
66
Neutral
AU$104.92M35.7112.38%1.04%11.82%113.33%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:REH
Reece Limited
16.15
-9.55
-37.15%
RLLWF
Reliance Worldwide Corp.
3.18
-0.02
-0.63%
DE:0BS
Bapcor Ltd
2.82
0.29
11.46%
DE:3NR
NRW Holdings Limited
1.63
-0.10
-5.78%
AU:SGI
Stealth Global Holdings Ltd.
0.80
0.56
233.33%
AU:VNT
Ventia Services Group Limited
4.86
1.32
37.29%

Reece Limited Corporate Events

Reece Limited Director Increases Shareholding
May 1, 2025

Reece Limited announced a change in the director’s interest, as Angela Mentis, a director, increased her indirect interest in the company by acquiring 2,000 ordinary shares through the Mentis Superannuation Fund. This purchase, valued at $31,480, raises her total holding to 7,000 shares. The acquisition of shares on-market reflects a potential vote of confidence in the company’s future prospects and may influence stakeholder perceptions positively.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.