ASX:REH

Stock Analysis Report

Executive Summary

Reece Limited engages in importing, wholesaling, distributing, marketing, and retailing plumbing, bathroom, heating, ventilation, air-conditioning, and refrigeration products in Australia, the United States, and New Zealand.

Snowflake

Fundamentals

Average dividend payer with moderate growth potential.


Similar Companies

Share Price & News

How has Reece's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-2.6%

REH

1.2%

AU Trade Distributors

1.0%

AU Market


1 Year Return

-3.9%

REH

-10.0%

AU Trade Distributors

11.7%

AU Market

Return vs Industry: REH exceeded the Australian Trade Distributors industry which returned -10% over the past year.

Return vs Market: REH underperformed the Australian Market which returned 11.7% over the past year.


Shareholder returns

REHIndustryMarket
7 Day-2.6%1.2%1.0%
30 Day-5.0%-3.0%-0.2%
90 Day2.4%-0.7%0.3%
1 Year-2.0%-3.9%-7.9%-10.0%18.1%11.7%
3 Year34.1%19.9%59.5%44.2%37.4%19.0%
5 Year85.7%58.7%108.1%75.8%51.7%17.6%

Price Volatility Vs. Market

How volatile is Reece's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

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

28.72x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Undervalued: REH (A$10.35) is trading above our estimate of fair value (A$8.35)

Significantly Undervalued: 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 (28.7x) compared to the Trade Distributors industry average (18.3x).

PE vs Market: REH is poor value based on its PE Ratio (28.7x) compared to the Australian market (17.9x).


Price to Earnings Growth Ratio

Low PEG Ratio: REH is poor value based on its PEG Ratio (2.2x)


Price to Book Ratio

PB vs Industry: REH is overvalued based on its PB Ratio (2.9x) compared to the AU Trade Distributors industry average (1x).


Next Steps

Future Growth

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

13.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: REH's forecast earnings growth (13% per year) is above the savings rate (2.3%).

Earnings vs Market: REH's earnings (13% per year) are forecast to grow faster than the Australian market (10.2% per year).

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

Revenue vs Market: REH's revenue (3.6% per year) is forecast to grow faster than the Australian market (3.5% per year).

High Growth Revenue: REH's revenue (3.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: REH's Return on Equity is forecast to be low in 3 years time (10.5%).


Next Steps

Past Performance

How has Reece performed over the past 5 years?

9.5%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: REH's earnings have grown by 9.5% per year over the past 5 years.

Accelerating Growth: REH's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: REH had negative earnings growth (-10%) over the past year, making it difficult to compare to the Trade Distributors industry average (-42.9%).


Return on Equity

High ROE: REH's Return on Equity (10.1%) is considered low.


Return on Assets

ROA vs Industry: REH has a higher Return on Assets than the Trade Distributors industry average last year.


Return on Capital Employed

ROCE Improving: REH's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Reece's financial position?


Financial Position Analysis

Short Term Liabilities: REH's short term assets (A$2.0B) exceeds its short term liabilities (A$793.2M)

Long Term Liabilities: REH's short term assets (2.0B) exceeds its long term liabilities (1.7B)


Debt to Equity History and Analysis

Debt Level: REH's debt to equity ratio (82.2%) is considered high

Reducing Debt: REH's debt to equity ratio has increased from 24.7% to 82.2% over the past 5 years.

Debt Coverage: REH's debt is not well covered by operating cash flow (15.6%).

Interest Coverage: REH's interest payments on its debt are well covered by EBIT (4.6x coverage).


Balance Sheet

Inventory Level: REH has a high level of physical assets or inventory.

Debt Coverage by Assets: REH's debt is covered by short term assets (assets are 1.198510x debt).


Next Steps

Dividend

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

1.96%

Current Dividend Yield


Dividend Yield vs Market

company2.0%marketbottom25%2.5%markettop25%5.6%industryaverage2.2%forecastin3Years2.2%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: REH's dividend (1.96%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.47%).

High Dividend: REH's dividend (1.96%) is low compared to the top 25% of dividend payers in the Australian market (5.58%).

Stable Dividend: REH's dividends per share have been stable 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 reasonable payout ratio (56.2%), REH's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: REH's dividends in 3 years are forecast to be well covered by earnings (45.8% payout ratio).


Next Steps

Management

What is the CEO of Reece's salary, the management and board of directors tenure and is there insider trading?

3.1yrs

Average board tenure


CEO

Peter Wilson (51yo)

11.8yrs

Tenure

AU$4,701,545

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 ($USD3.20M) is about average for companies of similar size in the Australian market ($USD2.27M).

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


Board Age and Tenure

3.1yrs

Average Tenure

50.5yo

Average Age

Experienced Board: REH's board of directors are considered experienced (3.1 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyAU$40,403,80706 Mar 19
Perpetual Limited
EntityCompany
Shares4,042,799
Max PriceAU$9.99
SellAU$90,174,31106 Mar 19
Perpetual Limited
EntityCompany
Shares8,803,359
Max PriceAU$10.24

Ownership Breakdown


Management Team

  • Leslie Wilson (78yo)

    Executive Chairman

    • Tenure: 18.8yrs
    • Compensation: AU$1.48m
  • Peter Wilson (51yo)

    CEO, MD & Executive Director

    • Tenure: 11.8yrs
    • Compensation: AU$4.70m
  • Gavin Street (50yo)

    CFO & Company Secretary

    • Tenure: 1.3yrs
    • Compensation: AU$1.01m

Board Members

  • Leslie Wilson (78yo)

    Executive Chairman

    • Tenure: 18.8yrs
    • Compensation: AU$1.48m
  • Peter Wilson (51yo)

    CEO, MD & Executive Director

    • Tenure: 11.8yrs
    • Compensation: AU$4.70m
  • Tim Poole (50yo)

    Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: AU$177.50k
  • Megan Quinn (54yo)

    Non-Executive Director

    • Tenure: 2.1yrs
    • Compensation: AU$125.00k
  • Bruce Wilson (44yo)

    Non-Executive Director

    • Tenure: 3.1yrs
    • Compensation: AU$90.00k
  • Georgina Williams

    Non-Executive Director

    • Tenure: 2.1yrs
    • Compensation: AU$125.00k
  • Andrew Wilson (45yo)

    Non-Executive Director

    • Tenure: 1.1yrs
    • Compensation: AU$75.00k

Company Information

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


Key Information

  • Name: Reece Limited
  • Ticker: REH
  • Exchange: ASX
  • Founded: 1919
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: AU$5.917b
  • Shares outstanding: 560.82m
  • Website: https://www.reecegroup.com.au

Number of Employees


Location

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

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
REHASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 1992
REHCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1992
REEC.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992

Biography

Reece Limited engages in importing, wholesaling, distributing, marketing, and retailing plumbing, bathroom, heating, ventilation, air-conditioning, and refrigeration products in Australia, the United State ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/14 10:31
End of Day Share Price2019/10/14 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.