Why fund managers see long-term value in Reece despite a brutal 2025

Reece's chairman gave an unusually honest account of the company's struggles in 2025, but fund managers point to a long US growth runway and a cheap valuation.

13 Jul 2026 · 6 min read

Plumbing and building products distributor Reece endured a brutally honest reckoning from its own chairman in August 2025, with Selector Funds Management's Quarterly Report detailing CEO Peter Wilson bemoaning both a subdued housing market and a Victorian workforce he said had struggled to uncouple innovation and productivity following the state's lockdowns, comments that came from a family controlling close to 70% of the group and had an immediate impact on valuation, with shares falling 18% over the reporting month and 50% for the 2025 calendar year to that point.

A founder's brutal honesty precedes a long US growth runway

Auscap Asset Management's March 2026 Presentation framed the long-term opportunity behind the near-term pain: Reece's US branch count remains less than half its Australian count, despite the US population being roughly 12 times Australia's, implying a long expansion runway, complicated in the near term by high interest rates, tariffs, and an aggressive new US competitor poaching Reece staff for about nine months. Selector Funds Management's own August 2025 report put a number on the resulting valuation: with a market capitalisation of $7.7 billion, net debt of $590 million and EBITDA of $900 million, the business was valued on a lowly 8.5 times multiple following the sell-off.

We're based in Victoria, where, through a huge period of lockdown, we have really struggled to uncouple innovation and productivity. We have struggled to get people to come into the office, and so if you don't do that, you aren't going to unleash the innovation part of your strategy.

— Reece CEO Peter Wilson, quoted by Selector Funds Management, Quarterly Report, August 2025

Selector Funds Management's February 2026 Monthly Report detailed the subsequent half-year result showing the company continuing to invest through the downturn: revenue up 6% to $4.6 billion, though operating profit fell 14% to $262 million due to continued market softness and branch rollout investment, with the US network expanding by 19 stores to 286 and the Australian network adding four net new branches to reach 680 stores. Allan Gray's March 2026 Quarterly Report noted building-cycle-exposed companies like Reece have had particularly weak share price performance and may offer considerably more upside potential than Australia's more popular bank stocks, having recently accumulated a modest exposure to the sector.

What managers are watching next

Pendal Group's July 2026 Newsletter flagged continued near-term headwinds from subdued US housing data, with flat mortgage applications, 30-year rates around 6.6%, and existing home sales declining, pointing to affordability rather than supply as the key constraint weighing on residential investment and, in turn, plumbing and building products distributors like Reece. With Auscap Asset Management continuing to add to a long-term holding on the view that Reece's defensive plumbing maintenance end market and service-based value proposition support durable long-term economics, the pace of US branch expansion against a soft housing backdrop remains the central factor managers are watching.