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Reece Limited
(Sydney:REH)
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Rating:63Neutral
Price Target:
AU$18.00
â–˛(8.24% Upside)
Action:Reiterated
Date:10/31/26
The score is driven primarily by solid underlying financial performance (scale growth and improved 2026 cash flow), offset by pressured profitability/returns and a valuation that looks expensive (high P/E, low yield). Near-term technical signals and the earnings call’s mixed outlook—especially U.S. margin and demand uncertainty—further cap the score.
Positive Factors
Scale and ANZ Growth
Reece is continuing to expand its revenue base, with ANZ delivering strong sales and EBIT growth. This regional momentum supports operating scale, reinforces the established trade-distribution model, and provides a durable foundation while the company develops its broader network.
Negative Factors
Margin Compression
Revenue growth is not translating fully into bottom-line earnings, indicating weaker operating efficiency and reduced profit conversion. Persistent margin pressure could limit earnings growth, constrain returns on capital, and make future performance more dependent on volume expansion.
Read all positive and negative factors
Positive Factors
Negative Factors
Scale and ANZ Growth
Reece is continuing to expand its revenue base, with ANZ delivering strong sales and EBIT growth. This regional momentum supports operating scale, reinforces the established trade-distribution model, and provides a durable foundation while the company develops its broader network.
Read all positive factors
Reece Limited (REH) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$10.51B
Dividend Yield1.1%
Average Volume (3M)540.51K
Price to Earnings (P/E)34.2
Beta (1Y)1.57
Revenue Growth4.46%
EPS Growth1.20%
CountryAU
Employees9,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.50
Shares Outstanding615,092,000
10 Day Avg. Volume541,201
30 Day Avg. Volume540,512
Financial Highlights & Ratios
PEG Ratio16.89
Price to Book (P/B)2.86
Price to Sales (P/S)1.14
P/FCF Ratio22.22
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$16.64Price Target Upside0.06% Upside
Rating ConsensusHold
Number of Analyst Covering10
EPS Forecast (FY)0.53
Revenue Forecast (FY)AU$9.69B
Reece Limited Business Overview & Revenue Model
Company Description
Reece Limited operates as a major distributor of various essential products across Australia, the United States, and New Zealand. Its comprehensive product range includes plumbing, bathroom amenities, heating, ventilation, and air-conditioning (HV...
Reece Limited Earnings Call Summary
Earnings Call Date:Aug 23, 2026
(Q4-2026)
| Next Earnings Date:Mar 03, 2027
Earnings Call Sentiment Neutral
The call presented a mixed picture: solid topline growth (A$9.4bn, +4.5%) and clear operational/strategic progress in ANZ (ANZ sales +8.3%, ANZ EBIT +6%), meaningful U.S. network expansion (net +25 branches) and strong cash generation and capital returns (A$645m operating cash inflow, A$401m buybacks). Offsetting these positives were flat group EBITDA, a modest decline in group EBIT, notable margin pressure in the U.S. (LFL sales -1.7%, U.S. EBIT -13%), elevated costs from ongoing investment, and exposure to a weak U.S. residential market and macro uncertainty. Management emphasized a through‑the‑cycle, multi‑year strategy and expects returns to recover as growth investments moderate, but near‑term uncertainty (particularly in the U.S.) tempers the outlook.Positive Updates
Group Revenue Growth
Sales revenue of A$9.4 billion, up 4.5% year-on-year, demonstrating topline growth across the group.
Negative Updates
Flat EBITDA and Lower Group EBIT
Group EBITDA essentially flat at A$901 million; Group EBIT down 2.6% to A$534 million, signaling margin pressure despite revenue growth.
Read all updates
Q4-2026 Updates
Positive
Negative
Group Revenue Growth
Sales revenue of A$9.4 billion, up 4.5% year-on-year, demonstrating topline growth across the group.
Read all positive updates
Company Guidance
Management guided that ANZ enters FY27 with a solid pipeline to support first‑half momentum while the U.S. is expected to deliver only modest sales growth; the U.S. rollout remains a multi‑year plan with an anticipated 15–20 net new branches p.a. (after net 25 opened in FY26 and 24 in FY25). Key numeric pointers: FY26 sales $9.4bn (+4.5%), EBITDA $901m (flat), EBIT $534m (‑2.6%), EPS $0.495, return on capital 11.9%; exiting FY26 net debt $744m (1.0x EBITDA, down from 1.5x at Dec), net operating cash inflow $645m, net working capital/sales 19%, $401m returned via buybacks, FY26 capex 1.9% of sales with management expecting capex to normalise toward the historic ~2–3% range, FY27 gross interest expense ~$60–70m (FY26 $66m), and a further ~$10m Metalflex amortisation impact in FY27; management reiterated risks from soft U.S. residential construction, interest‑rate sensitivity and housing affordability.Reece Limited Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
69
Positive
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 9.38B | 8.98B | 9.10B | 8.84B | 7.65B |
| Gross Profit | 2.71B | 2.56B | 2.61B | 2.51B | 2.14B |
| EBITDA | 895.02M | 863.32M | 983.92M | 912.41M | 820.78M |
| Net Income | 308.15M | 316.94M | 419.17M | 387.61M | 392.49M |
Balance Sheet | |||||
| Total Assets | 7.67B | 7.42B | 7.09B | 6.92B | 6.61B |
| Cash, Cash Equivalents and Short-Term Investments | 327.67M | 275.41M | 341.38M | 372.71M | 220.48M |
| Total Debt | 2.25B | 1.97B | 1.83B | 1.96B | 1.90B |
| Total Liabilities | 3.93B | 3.37B | 3.21B | 3.30B | 3.29B |
| Stockholders Equity | 3.75B | 4.05B | 3.88B | 3.63B | 3.32B |
Cash Flow | |||||
| Free Cash Flow | 482.49M | 341.40M | 492.93M | 588.90M | 21.68M |
| Operating Cash Flow | 645.17M | 599.78M | 750.90M | 766.38M | 221.79M |
| Investing Cash Flow | -156.99M | -342.50M | -243.96M | -309.52M | -280.98M |
| Financing Cash Flow | -432.53M | -323.53M | -538.80M | -307.12M | -574.66M |
Reece Limited Technical Analysis
Negative
16.63
Price Trends
16.62
Negative
16.44
Negative
15.22
Positive
Market Momentum
-0.04
Positive
35.19
Neutral
21.17
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 16.63 is below the 20-day moving average (MA) of 16.92, above the 50-day MA of 16.62, and above the 200-day MA of 15.22, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 35.19 is Neutral, neither overbought nor oversold. The STOCH value of 21.17 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | AU$521.49M | 11.17 | 16.46% | 8.29% | 0.92% | 12.22% | |
66 Neutral | AU$365.28M | 15.15 | 10.64% | 3.95% | 30.67% | -24.67% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | AU$10.51B | 34.18 | 8.32% | 1.10% | 4.46% | 1.20% | |
62 Neutral | AU$252.03M | 16.36 | 10.34% | 2.73% | 1.42% | 61.72% | |
59 Neutral | AU$3.27B | 250.72 | 0.81% | 1.54% | -5.16% | -93.82% | |
50 Neutral | AU$51.45M | -3.17 | -14.13% | 2.88% | 2.69% | 51.68% |
* Industrials Sector Average
AU:REH
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Reece Limited Corporate Events
Reece Limited Announces Departure of Director Angela Mentis
Oct 30, 2026
Reece Limited has announced that non-executive director Angela Mentis ceased to be a director of the company effective 30 October 2026. The company disclosed that Mentis holds no Reece securities directly, but has an indirect interest through the ...
Reece AGM backs board but issues first strike on pay
Oct 30, 2026
Reece Limited reported the results of its 2026 annual general meeting, confirming that all board-related resolutions, including the election of Tim Ford and the re-election of several existing directors, were carried with strong shareholder suppor...
Reece lifts FY26 revenue to $9.4bn amid U.S. headwinds and board reshuffle
Oct 30, 2026
Reece Limited has reported sales revenue of $9.4 billion for FY26, up 4.5% on the prior year, driven by higher volumes and modest inflation in Australia and New Zealand and continued network expansion in the United States. Despite challenging cond...
Reece lifts Q1 revenue as ANZ strength offsets softer U.S. market
Oct 29, 2026
Reece Limited reported first-quarter FY27 sales revenue of A$2.51 billion, a 4.3% increase year on year, or 8.7% on a constant currency basis. The performance highlights the company’s expanding footprint and its exposure to divergent market ...
Reece Limited Reports Lapse of Retention and Service Rights
Oct 5, 2026
Reece Limited has announced the cessation of specific retention and service rights, with 15,200 retention rights and 28 service rights lapsing after their performance or service conditions were not met by the end of September 2026. The lapses indi...
Reece sets date for 2026 annual general meeting
Sep 23, 2026
Reece Limited has released its 2026 Notice of Annual General Meeting, confirming the AGM will be held on 30 October 2026 at 10:00am AEDT. The announcement, authorised by the company secretary on behalf of the board, underscores the company’s...
Reece updates market on director Peter Wilson’s expanded equity interests
Aug 23, 2026
Reece Limited has disclosed an updated statement of director Peter Wilson’s interests in company securities, detailing his direct shareholding and equity awards under the Reece Long Term Incentive Plan. The filing confirms his direct ownersh...
Reece Limited Reports Lapse of Performance Rights and Capital Adjustment
Aug 23, 2026
Reece Limited has notified the market of the cessation of 489,285 performance rights, which lapsed because the conditional requirements attached to these rights were not met or became incapable of being satisfied. The announcement reflects an adju...
Reece Declares Semi-Annual Dividend for June 2026 Period
Aug 23, 2026
Reece Limited has declared a semi-annual dividend of AUD 0.134 per ordinary fully paid share for the six-month period ended 30 June 2026, reinforcing its pattern of returning capital to shareholders. The dividend will trade ex on 6 October 2026, w...
Reece Lodges 2026 Corporate Governance Statement and Appendix 4G
Aug 23, 2026
Reece Limited is an Australia-listed entity that follows the ASX Corporate Governance Council Principles and Recommendations and discloses its framework through its investor website. It has formal governance documents, including a board charter an...
Reece Limited Publishes FY26 Annual Report for Year Ended 30 June 2026
Aug 23, 2026
Reece Limited has released its FY26 Annual Report for the 12-month period ended 30 June 2026, providing investors and stakeholders with the latest comprehensive overview of its financial and operational performance. The publication of the annual r...
Reece posts modest FY26 growth as ANZ recovery offsets U.S. housing softness
Aug 23, 2026
Reece Limited reported FY26 sales revenue of $9.38 billion, up 4.5%, with EBITDA flat at $901 million and EBIT down 2.6% to $534 million, while NPAT slipped 2.8% to $308 million and EPS edged 0.7% higher to 49.5 cents. The company highlighted reco...
Reece Limited Files FY26 Preliminary Final Report With ASX
Aug 23, 2026
Reece Limited has released its preliminary final report for the financial year ended 30 June 2026, lodging its FY26 Appendix 4E results with the ASX. The disclosure provides the market with full-year financial information, marking a key regulatory...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.