Reece Limited (REH) AI Stock Analysis

• Market Cap: $8.55B
• Dividend Yield: 1.83%
• Average Volume (3M): 1.31M
• Price to Earnings (P/E): 22.7
• Beta (1Y): 1.58
• Revenue Growth: 0.23%
• EPS Growth: -11.50%
• Country: AU
• Employees: 18,000
• Sector: Industrials
• Sector Strength: 86
• Industry: Industrial - Distribution
• EPS (TTM): 0.28
• Shares Outstanding: 645,984,200
• 10 Day Avg. Volume: 957,859
• 30 Day Avg. Volume: 1,309,612
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.89
• Enterprise Value/Revenue: 1.80
• Enterprise Value/Gross Profit: 6.25
• Enterprise Value/Ebitda: 18.45
• 1Y Price Target: $16.09
• Price Target Upside: 21.50% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 63 Neutral
• Price Target: AU$15.00 ▲(13.29%Upside)

Reece Limited shows strong financial performance with robust revenue growth and margins, contributing positively to the score. However, technical indicators suggest a bearish trend, which weighs down the overall score. The valuation indicates a moderate overvaluation with a low dividend yield, adding further pressure. These factors combined result in a moderate overall stock score.

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 makes money primarily through the sale of plumbing, waterworks, and HVAC-R products. The company's revenue model is based on distributing a wide array of products sourced from various manufacturers to its customer base, which includes trade professionals and businesses. Key revenue streams include retail sales from its expansive branch network and online sales through its digital platforms. Additionally, Reece Limited benefits from strategic partnerships with key suppliers and manufacturers, allowing it to offer exclusive products and competitive pricing. The company's earnings are also supported by its focus on customer service, technical support, and value-added services, which enhance customer loyalty and drive repeat business.

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 the 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	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	9.10B	8.84B	7.65B	6.27B	6.01B
Gross Profit	2.61B	2.51B	2.14B	798.32M	739.60M
EBITDA	983.92M	912.41M	820.78M	698.22M	634.49M
Net Income	419.17M	387.61M	392.49M	285.60M	229.00M
Balance Sheet
Total Assets	7.09B	6.92B	6.61B	6.12B	6.34B
Cash, Cash Equivalents and Short-Term Investments	341.38M	372.71M	220.48M	828.97M	1.00B
Total Debt	1.83B	1.96B	1.90B	2.01B	2.48B
Total Liabilities	3.21B	3.30B	3.29B	3.23B	3.59B
Stockholders Equity	3.88B	3.63B	3.32B	2.89B	2.75B
Cash Flow
Free Cash Flow	492.93M	588.90M	21.68M	299.00M	490.20M
Operating Cash Flow	750.90M	766.38M	221.79M	371.64M	600.96M
Investing Cash Flow	-243.96M	-309.52M	-280.98M	-67.92M	-279.50M
Financing Cash Flow	-538.80M	-307.12M	-574.66M	-462.13M	556.28M

Reece Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 13.24
• 50DMA: Negative
• 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 Negative. The current price of 13.24 is below the 20-day moving average (MA) of 13.48, below the 50-day MA of 14.88, and below the 200-day MA of 19.13, indicating a bearish trend. The MACD of -0.43 indicates Negative momentum. The RSI at 37.92 is Neutral, neither overbought nor oversold. The STOCH value of 56.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:REH.

Reece Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	64 Neutral	$10.62B	16.56	7.13%	2.15%	2.87%	-30.79%
REH	63 Neutral	$8.55B	22.72	9.84%	1.83%	0.23%	-11.50%
RLLWF	―	$2.10B	14.58	10.01%	2.19%	―	―
0BS	―	€717.33M	―	-16.06%	3.74%	―	―
3NR	―	€826.34M	11.44	18.01%	5.28%	―	―
VNT	68 Neutral	AU$4.38B	20.36	36.67%	3.81%	7.56%	16.00%
SGI	64 Neutral	AU$88.08M	30.36	12.38%	1.24%	11.82%	113.33%

Reece Limited Corporate Events

Reece Limited Issues Unquoted Performance Rights

Reece Limited has announced the issuance of 22,531 unquoted performance rights under an employee incentive scheme. These securities are not intended to be quoted on the ASX, and this move is part of the company’s ongoing efforts to motivate and retain key personnel, potentially impacting its operational efficiency and stakeholder engagement.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$19.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.

Reece Limited Announces Cessation of Securities

Reece Limited has announced the cessation of 56,519 performance rights due to the conditions for these securities not being met. This development may impact the company’s capital structure and could have implications for stakeholders, reflecting on the company’s operational adjustments or strategic shifts.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$19.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.

Reece Limited Announces Cessation of Securities

Reece Limited has announced the cessation of certain securities, specifically 4,173 retention rights, as the conditions for these securities have not been met or have become incapable of being satisfied. This announcement may impact the company’s capital structure and could have implications for stakeholders, reflecting on the company’s operational adjustments or strategic decisions.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$19.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.

Reece Limited Announces Board Changes with Resignation of Megan Quinn

Reece Limited announced the resignation of Megan Quinn from its board, effective July 2, 2025. Quinn, who has served as a non-executive director since 2017, expressed her respect for the company’s values and ambition. Chairman and CEO Peter Wilson thanked Quinn for her contributions and indicated that the board is evolving to include a mix of skills, experience, and diversity to support the company’s future. The company plans to announce new board appointments soon.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$18.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.

Reece Limited Announces Board Resignation

Reece Limited announced the resignation of Ross McEwan as a non-executive and Lead Independent Director, effective June 30, 2025. McEwan is stepping down to focus on his role as Chair of BHP Group Limited. The company expressed gratitude for his contributions and is committed to maintaining a diverse board with a suitable mix of skills and experience, with plans to announce a new Lead Independent Director soon.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$19.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.

Reece Limited Reports Challenging FY25 Trading Conditions Amid Housing Market Softness

Reece Limited has announced its FY25 trading update, highlighting a challenging trading environment due to ongoing housing market softness in Australia, New Zealand, and the US. The company expects its Group EBIT for FY25 to be between A$548m and A$558m, reflecting macro-economic headwinds and subdued underlying volumes. In the US, high exposure to the residential new construction sector and increased competition have impacted profitability, while interest rate cuts in Australia and New Zealand have yet to boost housing activity. Despite these challenges, Reece remains confident in its long-term strategy.

The most recent analyst rating on (AU:REH) stock is a Sell with a A$19.00 price target. To see the full list of analyst forecasts on Reece Limited stock, see the AU:REH Stock Forecast page.