Reece Limited (REH) AI Stock Analysis

• Market Cap: $10.21B
• Dividend Yield: 1.55%
• Average Volume (3M): 701.17K
• Price to Earnings (P/E): 27.1
• Beta (1Y): 1.66
• Revenue Growth: 0.23%
• EPS Growth: -11.50%
• Country: AU
• Employees: 18,000
• Sector: Industrials
• Sector Strength: 93
• Industry: Industrial - Distribution
• EPS (TTM): 0.58
• Shares Outstanding: 645,984,200
• 10 Day Avg. Volume: 664,239
• 30 Day Avg. Volume: 701,169
• PEG Ratio: -2.58
• Price to Book (P/B): 2.55
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 28.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $16.74
• Price Target Upside: 3.67% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 3

• Rating: 72 Outperform
• 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 Business Overview & Revenue Model

Company Description

Reece 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 Money

Reece 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

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

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

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
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
8.97B	9.10B	8.84B	7.65B	6.27B	6.01B
	Gross Profit
2.58B	2.61B	2.51B	2.14B	798.32M	739.60M
	EBIT
614.46M	674.40M	663.77M	548.93M	482.16M	410.02M
	EBITDA
874.36M	983.92M	944.01M	835.99M	698.22M	655.83M
	Net Income Common Stockholders
376.42M	419.17M	387.61M	392.49M	285.60M	229.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
273.27M	341.38M	372.71M	220.48M	828.97M	1.00B
	Total Assets
7.28B	7.09B	6.92B	6.61B	6.12B	6.34B
	Total Debt
1.95B	1.83B	1.96B	1.90B	2.01B	2.48B
	Net Debt
1.68B	1.49B	1.59B	1.68B	1.18B	1.48B
	Total Liabilities
3.18B	3.21B	3.30B	3.29B	3.23B	3.59B
	Stockholders Equity
4.10B	3.88B	3.63B	3.32B	2.89B	2.75B
Cash Flow		Free Cash Flow
362.05M	492.93M	588.90M	21.68M	299.00M	490.20M
	Operating Cash Flow
629.12M	750.90M	766.38M	221.79M	371.64M	600.96M
	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	-462.13M	556.28M

Reece Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 16.15
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REH	72 Outperform	$10.21B	27.12	9.84%	1.55%	0.23%	-11.50%
Sector *	66 Neutral	$4.49B	12.28	5.32%	248.53%	4.08%	-12.00%
RLLWF		$2.16B	19.77	10.01%	1.60%	―	―
0BS		€989.63M	―	-16.06%	2.90%	―	―
3NR		€726.33M	10.59	18.01%	5.98%	―	―
VNT	68 Neutral	AU$4.03B	18.69	36.67%	4.14%	7.56%	16.00%
SGI	66 Neutral	AU$104.92M	35.71	12.38%	1.04%	11.82%	113.33%

Reece Limited Corporate Events

Reece Limited Director Increases Shareholding

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.