ASX:REH

Stock Analysis Report

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Executive Summary

Reece Limited supplies plumbing, bathroom, heating, ventilation, air-conditioning, waterworks, and refrigeration products in Australia, the United States, and New Zealand. More Details


Snowflake Analysis

Solid track record with adequate balance sheet.


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

Stable Share Price: REH's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-3.3%

REH

-2.5%

AU Trade Distributors

-2.4%

AU Market


1 Year Return

35.0%

REH

18.2%

AU Trade Distributors

-8.3%

AU Market

Return vs Industry: REH exceeded the Australian Trade Distributors industry which returned 18.2% over the past year.

Return vs Market: REH exceeded the Australian Market which returned -8.3% over the past year.


Shareholder returns

REHIndustryMarket
7 Day-3.3%-2.5%-2.4%
30 Day7.0%9.9%1.8%
90 Day40.1%25.3%1.7%
1 Year37.3%35.0%21.7%18.2%-5.0%-8.3%
3 Year79.4%58.4%53.4%37.1%14.6%-0.08%
5 Year136.2%102.8%185.0%138.3%41.6%12.1%

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?

35.1x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: REH (A$14) is trading above our estimate of fair value (A$7.29)

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


Price To Earnings Ratio

PE vs Industry: REH is good value based on its PE Ratio (35.1x) compared to the AU Trade Distributors industry average (35.8x).

PE vs Market: REH is poor value based on its PE Ratio (35.1x) compared to the Australian market (21x).


Price to Earnings Growth Ratio

PEG Ratio: REH is poor value based on its PEG Ratio (4.3x)


Price to Book Ratio

PB vs Industry: REH is overvalued based on its PB Ratio (3.3x) compared to the AU Trade Distributors industry average (1.5x).


Next Steps

Future Growth

How is Reece forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

8.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: REH's forecast earnings growth (8.1% per year) is above the savings rate (2.3%).

Earnings vs Market: REH's earnings (8.1% per year) are forecast to grow slower than the Australian market (17.6% per year).

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

Revenue vs Market: REH's revenue (3% per year) is forecast to grow slower than the Australian market (4.6% per year).

High Growth Revenue: REH's revenue (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 (9.2%).


Next Steps

Past Performance

How has Reece performed over the past 5 years?

5.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: REH has high quality earnings.

Growing Profit Margin: REH's current net profit margins (3.8%) are higher than last year (3.7%).


Past Earnings Growth Analysis

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

Accelerating Growth: REH's earnings growth over the past year (13.2%) exceeds its 5-year average (5% per year).

Earnings vs Industry: REH earnings growth over the past year (13.2%) exceeded the Trade Distributors industry -38.9%.


Return on Equity

High ROE: REH's Return on Equity (8.3%) is considered low.


Next Steps

Financial Health

How is Reece's financial position?


Financial Position Analysis

Short Term Liabilities: REH's short term assets (A$2.9B) exceed its short term liabilities (A$1.1B).

Long Term Liabilities: REH's short term assets (A$2.9B) exceed its long term liabilities (A$2.5B).


Debt to Equity History and Analysis

Debt Level: REH's debt to equity ratio (66.3%) is considered high.

Reducing Debt: REH's debt to equity ratio has increased from 18.9% to 66.3% over the past 5 years.

Debt Coverage: REH's debt is well covered by operating cash flow (33%).

Interest Coverage: REH's interest payments on its debt are well covered by EBIT (3.8x coverage).


Balance Sheet


Next Steps

Dividend

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

0.86%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: REH's dividend (0.86%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.15%).

High Dividend: REH's dividend (0.86%) is low compared to the top 25% of dividend payers in the Australian market (5.48%).


Stability and Growth of Payments

Stable Dividend: REH is not paying a notable dividend for the Australian market, therefore no need to check if payments are stable.

Growing Dividend: REH is not paying a notable dividend for the Australian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: REH is not paying a notable dividend for the Australian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of REH's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

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

0.3yrs

Average management tenure


CEO

Peter Wilson (52 yo)

12.75yrs

Tenure

AU$4,505,539

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 ($USD3.18M) is about average for companies of similar size in the Australian market ($USD2.51M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Leslie Wilson
Executive Chairman19.75yrsAU$1.36m6.26%
A$ 576.6m
Peter Wilson
CEO, MD & Executive Director12.75yrsAU$4.51m0.082%
A$ 7.6m
Gavin Street
CEO of Australia & New Zealand0.25yrAU$1.05m0.0041%
A$ 375.2k
Andrew Cowlishaw
Group Chief Financial Officer0.25yrno datano data
Chantelle Duffy
Company Secretary0.25yrno datano data

0.3yrs

Average Tenure

52yo

Average Age

Experienced Management: REH's management team is not considered experienced ( 0.3 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Leslie Wilson
Executive Chairman19.75yrsAU$1.36m6.26%
A$ 576.6m
Peter Wilson
CEO, MD & Executive Director12.75yrsAU$4.51m0.082%
A$ 7.6m
Timothy Poole
Independent Non-Executive Director4.25yrsAU$210.83k0.0025%
A$ 226.8k
Megan Quinn
Non-Executive Director3.08yrsAU$119.79kno data
Bruce Wilson
Non-Executive Director4.08yrsAU$86.25k0%
A$ 0
Georgina Williams
Non-Executive Director3.08yrsAU$119.79kno data
Andrew Wilson
Independent Non-Executive Director2.08yrsAU$86.25kno data

4.1yrs

Average Tenure

51.5yo

Average Age

Experienced Board: REH's board of directors are considered experienced (4.1 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 been diluted in the past year, with total shares outstanding growing by 15.2%.


Top Shareholders

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$9.218b
  • Shares outstanding: 645.98m
  • 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 supplies plumbing, bathroom, heating, ventilation, air-conditioning, waterworks, and refrigeration products in Australia, the United States, and New Zealand. It serves customers in the trade, ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/29 10:40
End of Day Share Price2020/10/29 00:00
Earnings2020/06/30
Annual Earnings2020/06/30


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.