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REH

ReeceASX:REH Stock Report

Market Cap

AU$11.7b

7D

2.6%

1Y

25.4%

Updated

23 Oct, 2021

Data

Company Financials +
REH fundamental analysis
Snowflake Score
Valuation0/6
Future Growth3/6
Past Performance4/6
Financial Health4/6
Dividends3/6

REH Overview

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.

Reece Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Reece
Historical stock prices
Current Share PriceAU$18.09
52 Week HighAU$12.54
52 Week LowAU$25.97
Beta0.34
1 Month Change-7.89%
3 Month Change-21.76%
1 Year Change25.36%
3 Year Change78.40%
5 Year Change109.86%
Change since IPO6,521.52%

Recent News & Updates

Sep 23
Reece (ASX:REH) Is Increasing Its Dividend To AU$0.12

Reece (ASX:REH) Is Increasing Its Dividend To AU$0.12

Reece Limited ( ASX:REH ) has announced that it will be increasing its dividend on the 27th of October to AU$0.12. This...

Aug 30
Reece (ASX:REH) Is Increasing Its Dividend To AU$0.12

Reece (ASX:REH) Is Increasing Its Dividend To AU$0.12

The board of Reece Limited ( ASX:REH ) has announced that it will be increasing its dividend on the 27th of October to...

Aug 29
Is Reece (ASX:REH) A Risky Investment?

Is Reece (ASX:REH) A Risky Investment?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Shareholder Returns

REHAU Trade DistributorsAU Market
7D2.6%0.6%0.6%
1Y25.4%16.4%21.3%

Return vs Industry: REH exceeded the Australian Trade Distributors industry which returned 16.4% over the past year.

Return vs Market: REH exceeded the Australian Market which returned 21.3% over the past year.

Price Volatility

Is REH's price volatile compared to industry and market?
REH volatility
REH Beta0.34
Industry Beta0.83
Market Beta1

Stable Share Price: REH is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: REH's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19208,000Peter Wilsonhttps://group.reece.com

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. It serves customers in the trade, retail, commercial, and infrastructure markets. Reece Limited sells its products under the Reece , Viadux, Actrol, and Metaflex brands.

Reece Fundamentals Summary

How do Reece's earnings and revenue compare to its market cap?
REH fundamental statistics
Market CapAU$11.69b
Earnings (TTM)AU$285.60m
Revenue (TTM)AU$6.27b

40.9x

P/E Ratio

1.9x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
REH income statement (TTM)
RevenueAU$6.27b
Cost of RevenueAU$4.51b
Gross ProfitAU$1.76b
ExpensesAU$1.48b
EarningsAU$285.60m

Last Reported Earnings

Jun 30, 2021

Next Earnings Date

n/a

Earnings per share (EPS)0.44
Gross Margin28.09%
Net Profit Margin4.55%
Debt/Equity Ratio47.0%

How did REH perform over the long term?

See historical performance and comparison

Dividends

1.3%

Current Dividend Yield

41%

Payout Ratio

Valuation

Is Reece undervalued compared to its fair value and its price relative to the market?

40.92x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: REH (A$18.09) is trading above our estimate of fair value (A$10.92)

Significantly Below Fair Value: REH is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: REH is poor value based on its PE Ratio (40.9x) compared to the Australian Trade Distributors industry average (27.7x).

PE vs Market: REH is poor value based on its PE Ratio (40.9x) compared to the Australian market (20x).


Price to Earnings Growth Ratio

PEG Ratio: REH is poor value based on its PEG Ratio (3.5x)


Price to Book Ratio

PB vs Industry: REH is overvalued based on its PB Ratio (4x) compared to the AU Trade Distributors industry average (1.6x).


Future Growth

How is Reece forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

11.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: REH's forecast earnings growth (11.8% per year) is above the savings rate (1.9%).

Earnings vs Market: REH's earnings (11.8% per year) are forecast to grow faster than the Australian market (11.6% per year).

High Growth Earnings: REH's earnings are forecast to grow, but not significantly.

Revenue vs Market: REH's revenue (6.3% per year) is forecast to grow faster than the Australian market (5.5% per year).

High Growth Revenue: REH's revenue (6.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: REH's Return on Equity is forecast to be low in 3 years time (12.2%).


Past Performance

How has Reece performed over the past 5 years?

5.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: REH has high quality earnings.

Growing Profit Margin: REH's current net profit margins (4.6%) are higher than last year (3.8%).


Past Earnings Growth Analysis

Earnings Trend: REH's earnings have grown by 5.5% per year over the past 5 years.

Accelerating Growth: REH's earnings growth over the past year (24.7%) exceeds its 5-year average (5.5% per year).

Earnings vs Industry: REH earnings growth over the past year (24.7%) underperformed the Trade Distributors industry 28.1%.


Return on Equity

High ROE: REH's Return on Equity (9.9%) is considered low.


Financial Health

How is Reece's financial position?


Financial Position Analysis

Short Term Liabilities: REH's short term assets (A$3.0B) exceed its short term liabilities (A$1.3B).

Long Term Liabilities: REH's short term assets (A$3.0B) exceed its long term liabilities (A$2.0B).


Debt to Equity History and Analysis

Debt Level: REH's debt to equity ratio (47%) is considered high.

Reducing Debt: REH's debt to equity ratio has increased from 13.9% to 47% over the past 5 years.

Debt Coverage: REH's debt is well covered by operating cash flow (27.4%).

Interest Coverage: REH's interest payments on its debt are well covered by EBIT (5.5x coverage).


Balance Sheet


Dividend

What is Reece current dividend yield, its reliability and sustainability?

1.33%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: REH's dividend (1.33%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.23%).

High Dividend: REH's dividend (1.33%) is low compared to the top 25% of dividend payers in the Australian market (5.3%).


Stability and Growth of Payments

Stable Dividend: REH's dividend payments have been volatile in the past 10 years.

Growing Dividend: REH's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (40.7%), REH's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: REH's dividends in 3 years are forecast to be well covered by earnings (41.3% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure


CEO

Peter Wilson (53 yo)

13.75yrs

Tenure

AU$4,861,000

Compensation

Mr. Peter J. Wilson, B.Comm (Melb), FAIM, is Chief Executive Officer and Managing Director of Reece Limited (formerly known as Reece Australia Limited) since January 1, 2008, the start of a significant org...


CEO Compensation Analysis

Compensation vs Market: Peter's total compensation ($USD3.63M) is above average for companies of similar size in the Australian market ($USD2.36M).

Compensation vs Earnings: Peter's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: REH's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Members

Experienced Board: REH's board of directors are considered experienced (5.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Reece Limited's employee growth, exchange listings and data sources


Key Information

  • Name: Reece Limited
  • Ticker: REH
  • Exchange: ASX
  • Founded: 1920
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: AU$11.686b
  • Shares outstanding: 645.98m
  • Website: https://group.reece.com

Number of Employees


Location

  • Reece Limited
  • 118 Burwood Highway
  • Burwood
  • Victoria
  • 3125
  • Australia

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/10/23 07:05
End of Day Share Price2021/10/22 00:00
Earnings2021/06/30
Annual Earnings2021/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.