Reece (ASX:REH) $16.90

Reece (REH) +2.18%:  delivered a mixed FY26 result, with a solid recovery in Australia and New Zealand offset by ongoing weakness in the US housing market. The volatility in the share price intra-day, showed some indecision, but overall, we think the evidence over the cautious rhetoric from management is what we should really take on board;

Key FY26 numbers:

• Revenue of A$9.38 billion, up 5% from A$8.98 billion, ahead of A$9.3bn consensus
  Underlying Net profit of A$308 million, down 2.8% from A$317 million, but ahead of expectations.
• EPS of 5c, up marginally from 49.2c.
• Final dividend of 4c, taking the full-year dividend to 18.84c, up 2.6%.

Australia and New Zealand was the standout, with revenue rising 8.3% to A$4.20 billion as sales volumes recovered. The US was more subdued, with revenue up 6.5% to A$4.90 billion, but demand remained constrained by weakness in residential new construction.

Reece continued to invest through the softer market, opening 25 new US stores during the year. That should enhance its position when activity eventually improves, although it does mean the business continues to carry the cost of expansion while market conditions remain challenging.

Management flagged a strong pipeline entering 1H27, but expects more modest US growth as residential construction remains under pressure. That is likely to keep the market focused on the timing of a genuine US housing recovery rather than the relatively healthy trends being seen locally.

MM’s view: REH is a recovery story and there are early signs of things improving. Their strategy of continuing to invest in the US through the downturn makes sense longer term, but we’ll need some patience before that translates into stronger earnings growth.

The stock was down ~7% early before recovering to close mildly higher – we think that’s about right.