Persimmon (PSMMY) AI Stock Analysis

• Market Cap: $4.66B
• Dividend Yield: 5.33%
• Average Volume (3M): 1.27K
• Price to Earnings (P/E): 14.1
• Beta (1Y): 0.73
• Revenue Growth: 20.00%
• EPS Growth: 2.62%
• Country: US
• Employees: 4,731
• Sector: Consumer Cyclical
• Sector Strength: 75
• Industry: Residential Construction
• EPS (TTM): 0.81
• Shares Outstanding: 160,197,500
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 1,266
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 1.82
• Enterprise Value/Gross Profit: 10.04
• Enterprise Value/Ebitda: 14.55
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 71 Outperform
• Price Target: ―

Persimmon's stock benefits from strong revenue growth and a solid equity position, which reduce leverage risks. The positive technical indicators suggest a favorable market sentiment, although high stochastic levels require caution. Valuation metrics indicate that the stock is fairly priced with attractive dividends. However, declining profit margins and cash flow sustainability issues pose challenges to long-term financial health. Investors should monitor margin improvements and cash management.

Positive Factors

Revenue Growth

The company's consistent revenue growth indicates strong market demand and effective sales strategies, enhancing its competitive position in the residential construction industry.

Equity Position

A strong equity position reduces leverage risks and provides financial stability, allowing Persimmon to invest in growth opportunities and weather economic fluctuations.

Cash Flow Improvement

Improved cash generation enhances the company's ability to fund operations and investments internally, reducing reliance on external financing and improving financial resilience.

Negative Factors

Declining Profit Margins

Decreasing profit margins indicate rising costs or pricing pressures, which could impact long-term profitability and necessitate cost management or strategic pricing adjustments.

Cash Flow Sustainability

A low cash flow to net income ratio suggests that earnings are not fully converting into cash, potentially limiting the company's ability to sustain operations and invest in growth.

Margin Challenges

Persistent margin challenges could strain financial resources, affecting the company's ability to maintain competitive pricing and invest in future growth initiatives.

Persimmon Business Overview & Revenue Model

Company Description

Persimmon PLC is one of the leading housebuilding companies in the United Kingdom. The company primarily operates in the residential property sector, focusing on the design, construction, and sale of homes. Persimmon caters to a diverse range of homebuyers through its various brands, offering different types and sizes of homes across the UK. The company is recognized for its commitment to quality, sustainability, and customer satisfaction.

How the Company Makes Money

Persimmon makes money primarily through the sale of newly constructed residential properties. The company's revenue model is centered around acquiring land, obtaining planning permissions, and developing residential sites into attractive housing estates. Persimmon benefits from a strategic land bank that allows it to build homes in desirable locations. Key revenue streams include the sale of homes under its multiple brands, such as Persimmon Homes, Charles Church, and Westbury Partnerships. The company may also generate income from partnerships with local governments and housing associations, particularly in affordable housing projects. Additionally, Persimmon's financial performance is influenced by factors such as the UK housing market conditions, government housing policies, and economic factors affecting consumer demand and affordability.

Persimmon Financial Statement Overview

Summary

Persimmon demonstrates 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. Continued focus on margin improvement and cash flow management is recommended to strengthen financial health.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.20B	2.77B	3.82B	3.61B	3.33B
Gross Profit	580.40M	795.10M	867.50M	1.08B	894.40M
EBITDA	400.40M	381.00M	738.20M	973.50M	799.30M
Net Income	267.10M	255.40M	561.00M	787.20M	638.40M
Balance Sheet
Total Assets	4.83B	4.79B	5.03B	4.79B	4.62B
Cash, Cash Equivalents and Short-Term Investments	258.60M	420.10M	861.60M	1.25B	1.23B
Total Debt	0.00	392.70M	498.00M	436.90M	362.60M
Total Liabilities	1.33B	1.37B	1.59B	1.17B	1.10B
Stockholders Equity	3.51B	3.42B	3.44B	3.63B	3.52B
Cash Flow
Free Cash Flow	52.60M	-166.20M	371.80M	763.90M	746.60M
Operating Cash Flow	84.90M	-129.80M	402.30M	784.80M	765.50M
Investing Cash Flow	-45.00M	-42.90M	-29.80M	-18.20M	-18.10M
Financing Cash Flow	-201.40M	-268.80M	-757.50M	-754.10M	-357.20M

Persimmon Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 29.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 29.15 is below the 20-day moving average (MA) of 29.58, below the 50-day MA of 30.92, and below the 200-day MA of 31.30, indicating a bearish trend. The MACD of -0.53 indicates Negative momentum. The RSI at 42.89 is Neutral, neither overbought nor oversold. The STOCH value of 83.77 is Negative, 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
MHO	80 Outperform	$4.00B	8.31	17.56%	―	7.39%	-1.37%
SKY	78 Outperform	$4.19B	19.73	14.39%	―	16.87%	54.47%
CVCO	77 Outperform	$4.28B	23.41	17.90%	―	16.66%	34.61%
MTH	76 Outperform	$5.59B	8.96	12.58%	2.05%	-3.72%	-23.00%
KBH	73 Outperform	$4.46B	8.68	14.07%	1.53%	3.65%	-0.61%
PSMMY	71 Outperform	$4.66B	14.06	7.30%	5.33%	20.00%	2.62%
Sector *	61 Neutral	$17.83B	12.89	-1.60%	3.03%	1.39%	-14.45%