Persimmon PLC PSN

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GBX 1,318.00 +35.50 (2.77%)

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As of Apr 26, 2024 3:35pm Delayed Price Closed

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Company Report

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Persimmon: Shares Appeal Despite Little Improvement in Homebuyer Appetite in Early 2024

Grant Slade Apr 25, 2024

Persimmon updated investors on its first-quarter trading performance. While homebuyer appetite is improving from its nadir in 2023, Persimmon’s first-quarter net private sales rate—of 0.61 homes per active sales outlet—is little changed from its prior update in March 2024. Consequently, we expect to lower our 2024 estimates given the lack of improvement in homebuyer demand in 2024 year to date and with Persimmon guiding to 10,000-10,500 home completions in 2024 (approximately 8% below our previous forecasts). Nonetheless, Persimmon shares remain attractive, trading at a 43% discount to our GBX 2,300 fair value estimate, which we don’t expect to change materially after downwardly revising our 2024 financial estimates.

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Price vs Fair Value

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PSN is trading at a 42% discount.

Price

GBX 1,334.50

Apr 23, 2024

Fair Value

GBX 7,731.00

Mar 1, 2023

Uncertainty

High

1-Star Price: GBX 9,938.00
5-Star Price: GBX 7,566.00
Economic Moat: Rqkc
Capital Allocation: Pmqgxjksv

Bulls Say, Bears Say

Bulls

Underlying housing demand is likely to benefit from the U.K.’s changing demographics. The ongoing ageing of the population is likely to support demand forb new housing over the coming decade as the U.K.'s average household size declines.

Bears

The U.K. government’s annual target of 300,000 new home additions is unlikely to materialise with housing market data not indicative of a material undersupply of housing.

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News

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European stocks trade mixed after three-day break; HSBC shares rallies while BP fizzles

MarketWatch May 2, 2023 7:49am

Trading Information

Previous Close Price: GBX 1,282.50
Day Range: GBX 1,296.00–1,324.50
52-Week Range: GBX 14.48–1,500.00
Bid/Ask: GBX 0.00 / GBX 0.00
Market Cap: GBX 421.35 Bil
Volume/Avg: 1.4 Mil / 1.6 Mil

Key Statistics

Price/Earnings (Normalized): 16.13
Price/Sales: 1.54
Dividend Yield (Trailing): 6.07%
Dividend Yield (Forward): 6.07%
Total Yield: 6.10%

Company Profile

Persimmon is the U.K.’s second largest residential property developer by revenue and dwelling completions, marketing homes under its three brands: Persimmon Homes, Charles Church, and Westbury Partnerships. Persimmon largely caters to the lower-priced segment of the newbuild market, attracting more first-time homebuyers than any of its peer homebuilders. Aligning with the typical business model employed by U.K. homebuilders, Persimmon is a vertically integrated speculative homebuilder.

Sector: Consumer Cyclical
Industry: Residential Construction
Stock Style Box: Mid Core
Total Number of Employees: 4,825
Website: https://www.persimmonhomes.com/corporate

Competitors

Valuation

Metric	PSN	BKG	TW.
Price/Earnings (Normalized)	16.13	11.29	13.00
Price/Book Value	1.25	1.46	1.03
Price/Sales	1.54	2.00	1.32
Price/Cash Flow	14.48	13.51	13.52

Price/Earnings

PSN

BKG

TW.

Financial Strength

Metric	PSN	BKG	TW.
Quick Ratio	0.64	0.64	0.79
Current Ratio	4.54	3.57	5.37
Interest Coverage	23.55	23.08	18.49

Quick Ratio

PSN

BKG

TW.

Profitability

Metric	PSN	BKG	TW.
Return on Assets (Normalized)	5.43%	6.78%	5.48%
Return on Equity (Normalized)	7.72%	13.98%	7.74%
Return on Invested Capital (Normalized)	7.65%	11.33%	7.47%

Return on Assets

PSN

BKG

TW.

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