Persimmon (PSMMY) AI Stock Analysis

• Market Cap: $5.89B
• Dividend Yield: 4.17%
• Average Volume (3M): 264.00
• Price to Earnings (P/E): 10.7
• Beta (1Y): 0.61
• Revenue Growth: 20.00%
• EPS Growth: 2.62%
• Country: US
• Employees: 4,731
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Residential Construction
• EPS (TTM): 0.81
• Shares Outstanding: 160,373,700
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 264
• PEG Ratio: 2.87
• Price to Book (P/B): 1.09
• Price to Sales (P/S): 1.20
• P/FCF Ratio: 72.83
• Enterprise Value/Market Cap: 0.75
• Enterprise Value/Revenue: 1.30
• Enterprise Value/Gross Profit: 7.25
• Enterprise Value/Ebitda: 10.91
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $44.00 ▲(27.80% Upside)
• Action: Upgraded Date: 11/30/25
• Date: Action: Upgraded 11/30/25

Persimmon's stock is supported by strong technical indicators and a reasonable valuation, despite challenges in profitability and cash flow sustainability. The upward price trend is a significant positive, but caution is advised due to potential overbought conditions.

Positive Factors

Strong balance sheet / low leverage

An equity ratio above 70% and a debt-to-equity of zero in 2024 materially reduce financial leverage. This durable balance sheet strength supports land acquisition and project funding, provides a cushion in downturns, and lowers refinancing risk over the coming months.

Consistent revenue growth

A 15%+ revenue increase in 2024 indicates resilient demand and effective conversion of the development pipeline into completions. Sustained top-line growth underpins scale benefits, helps absorb fixed costs, and supports long-term monetization of land and planning investments.

Improving cash generation

The return to positive operating cash flow and improved free cash flow signals better cash conversion, easing funding needs for inventory and land. If sustained, stronger cash generation enhances financial flexibility for reinvestment and reduces reliance on external financing.

Negative Factors

Significant margin compression

A sharp fall in gross margin to ~18% materially reduces earnings power and project returns. Persistent margin erosion—from cost inflation, pricing mix shifts, or higher build costs—weakens sustainable profitability and limits cash available for reinvestment and dividends over the medium term.

Low cash-to-earnings conversion

Low operating cash flow relative to net income signals weaker earnings quality and potential working capital timing stress. This undermines the sustainability of reported profits to fund land purchases, capex, or distributions without increased external financing if not improved.

Declining cash reserves

A reduction in cash buffers lowers resilience to market softness and reduces flexibility to pursue strategic land buys. Smaller cash reserves increase sensitivity to funding shocks and interest/credit conditions, raising medium-term liquidity risk if cash generation weakens again.

Persimmon Business Overview & Revenue Model

Company Description

Persimmon Plc, together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; executive housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.

How the Company Makes Money

Persimmon generates revenue primarily through the sale of residential properties. The company's revenue model is driven by the development and sale of new homes, which includes both private sales and affordable housing schemes. Key revenue streams include sales from its various brands, such as Persimmon Homes, Charles Church, and Westbury Partnerships. Additionally, the company benefits from partnerships with local authorities and housing associations to develop affordable housing, which enhances its market reach. Factors contributing to its earnings include strong demand for housing, efficient land acquisition strategies, and a robust construction pipeline, as well as favorable government policies supporting homeownership.

Persimmon Financial Statement Overview

Summary

Persimmon shows revenue growth and a strong equity position, reducing leverage risks. However, declining margins and cash reserves, along with a low operating cash flow to net income ratio, suggest profitability and cash flow sustainability challenges.

Income Statement

Persimmon's revenue for 2024 showed a 15.41% increase from the previous year, indicating positive growth. However, gross profit and net income margins have decreased over the years, with a notable drop in gross profit margin from 29.37% in 2023 to 18.13% in 2024. The absence of EBIT in 2024 affects profitability analysis. Despite revenue growth, declining margins suggest potential profitability challenges.

Balance Sheet

The company's balance sheet reflects strong equity, with an equity ratio consistently above 70%. The debt-to-equity ratio improved to 0 in 2024, reducing leverage risks. Previously, the debt-to-equity ratio was manageable, indicating prudent financial management. However, the decline in cash reserves from 2023 to 2024 may require monitoring.

Cash Flow

Operating cash flow turned positive in 2024 after a negative year in 2023, indicating improved cash generation. Free cash flow also improved significantly. However, the operating cash flow to net income ratio remains low, suggesting that cash earnings are not fully translating into net income. Cash flow improvements are a positive sign, but sustainability needs assessment.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.39B	3.20B	2.77B	3.82B	3.61B	3.33B
Gross Profit	607.40M	580.40M	795.10M	867.50M	1.08B	894.40M
EBITDA	403.70M	400.40M	368.80M	738.20M	973.50M	799.30M
Net Income	256.40M	267.10M	255.40M	561.00M	787.20M	638.40M
Balance Sheet
Total Assets	4.99B	4.83B	4.79B	5.03B	4.79B	4.62B
Cash, Cash Equivalents and Short-Term Investments	123.00M	258.60M	420.10M	861.60M	1.25B	1.23B
Total Debt	0.00	14.50M	188.40M	498.00M	436.90M	362.60M
Total Liabilities	1.51B	1.33B	1.37B	1.59B	1.17B	1.10B
Stockholders Equity	3.48B	3.51B	3.42B	3.44B	3.63B	3.52B
Cash Flow
Free Cash Flow	-32.90M	52.60M	-166.20M	371.80M	763.90M	746.60M
Operating Cash Flow	11.60M	84.90M	-129.80M	402.30M	784.80M	765.50M
Investing Cash Flow	-39.70M	-45.00M	-42.90M	-29.80M	-18.20M	-18.10M
Financing Cash Flow	-199.10M	-201.40M	-268.80M	-757.50M	-754.10M	-357.20M

Persimmon Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 34.43
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSMMY, the sentiment is Negative. The current price of 34.43 is below the 20-day moving average (MA) of 40.25, below the 50-day MA of 38.50, and above the 200-day MA of 33.75, indicating a neutral trend. The MACD of 0.26 indicates Positive momentum. The RSI at 32.33 is Neutral, neither overbought nor oversold. The STOCH value of 0.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSMMY.

Persimmon Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SKY	74 Outperform	$4.92B	22.24	13.69%	―	12.14%	48.68%
PSMMY	72 Outperform	$5.89B	10.66	7.30%	4.17%	20.00%	2.62%
MHO	71 Outperform	$3.66B	8.49	13.20%	―	4.77%	-9.30%
KBH	70 Outperform	$3.82B	10.07	10.70%	1.76%	-10.01%	-27.81%
CVCO	66 Neutral	$4.37B	26.87	17.18%	―	15.81%	37.89%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
MTH	60 Neutral	$4.77B	10.29	8.76%	2.62%	-6.06%	-32.39%