Persimmon (PSMMY) AI Stock Analysis

• Market Cap: $5.14B
• Dividend Yield: 4.17%
• Average Volume (3M): 264.00
• Price to Earnings (P/E): 15.4
• Beta (1Y): 0.71
• Revenue Growth: 20.00%
• EPS Growth: 2.62%
• Country: US
• Employees: 4,731
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Residential Construction
• EPS (TTM): 1.55
• Shares Outstanding: 160,373,700
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 264
• PEG Ratio: 4.33
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 1.18
• P/FCF Ratio: -367.77
• Enterprise Value/Market Cap: 0.73
• Enterprise Value/Revenue: 1.00
• Enterprise Value/Gross Profit: 6.53
• Enterprise Value/Ebitda: 8.65
• 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: 61 Neutral
• Price Target: $36.00 ▲(4.56% Upside)
• Action: Downgraded Date: 03/12/26
• Date: Action: Downgraded 03/12/26

The score is driven primarily by strong financial flexibility from an extremely low-leverage balance sheet, tempered by weak cash conversion/negative free cash flow in 2025 and lower margins versus prior years. Technically, the stock shows a bearish trend with negative momentum despite oversold readings, while valuation is supported by a mid-teens P/E and a ~4.37% dividend yield.

Positive Factors

Extremely low leverage / strong balance sheet

Very low debt and a large equity base provide durable financial flexibility in a cyclical housebuilding sector. This resilience supports development timing, land purchases and weathering downturns without forcing asset sales, underpinning long-term strategic optionality.

Top-line recovery in recent years

Sustained revenue growth into 2024–2025 signals recovering demand and better site absorption. A growing revenue base improves capacity utilization across projects, helps spread fixed costs over more homes, and supports medium-term margin and earnings stability if trends continue.

Land-and-planning development model

Control of land and planning creates structural value capture beyond pure construction. Owning the planning-to-build pipeline gives pricing and scheduling advantages, creates supply barriers to entry, and supports margin resilience over cycles via land-value appreciation and staged development profits.

Negative Factors

Weak cash generation / negative free cash flow

Negative free cash flow and a material drop in operating cash flow reduce the company's ability to self-fund land buys, capex or dividend payments. Persistent weak cash conversion increases reliance on external financing and constrains strategic flexibility over the medium term.

Material margin compression versus prior years

Substantial erosion of gross and net margins indicates sustained pressure from higher costs or weaker pricing power. Lower margins reduce earnings leverage on revenue and constrain returns on capital, making long-term profitability and shareholder returns more uncertain absent structural cost or pricing improvements.

Volatile cash conversion and working-capital swings

Inconsistent conversion of accounting profits to cash, driven by working-capital volatility, makes forecasting funding needs difficult. This instability hampers reliable reinvestment in land pipelines and raises execution risk across development cycles, increasing financing and operational uncertainty.

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 makes money primarily by developing and selling newly built residential homes in the UK. Its core revenue stream is the sale of completed houses to private buyers and to other buyer segments (e.g., institutional or housing-related counterparties where applicable), with revenue recognized when legal completion occurs and the home is transferred to the buyer. A key driver of profitability is its land and planning model: the company acquires or controls land, secures planning permissions, and then builds homes—capturing value from both the development margin on construction and the uplift from land moving through the planning/development cycle. Additional (generally smaller) revenue can be generated from land-related activity (e.g., disposal of land interests or strategic land outcomes) and other ancillary income connected to residential developments; if more specific segment breakdowns are required, null.

Persimmon Financial Statement Overview

Summary

Strength is the very conservative balance sheet (extremely low leverage), supporting resilience in a cyclical industry. Offsetting this, profitability has compressed sharply versus 2020–2022 and cash flow quality is a key concern, with 2025 operating cash flow weak versus net income and free cash flow turning negative.

Income Statement

Revenue returned to growth in 2024–2025 (with 2025 up ~8%), indicating improving top-line momentum after a weaker 2023. However, profitability has compressed sharply versus 2020–2022: gross margin fell to ~15% in 2025 from ~23%+ in 2022 and ~30% in 2021, and net margin declined to ~7.6% in 2025 from ~14.7% in 2022. Earnings remain positive and relatively stable in absolute terms, but the margin trajectory is the key pressure point.

Balance Sheet

The balance sheet is a clear strength, with extremely low leverage in 2024–2025 (debt-to-equity ~0.4%–0.5%) and a large equity base. Returns on equity are moderate (~7.6%–7.7% in 2024–2025) and well below 2021–2022 levels, reflecting softer profitability rather than balance-sheet risk. Overall financial flexibility appears high, which is valuable in a cyclical homebuilding environment.

Cash Flow

Cash generation weakened materially in 2025, with operating cash flow dropping to ~28m and free cash flow turning negative (~-12m) after a solid 2024 (~85m operating cash flow and ~53m free cash flow). Cash conversion is a concern: 2025 operating cash flow covered only a small fraction of net income (about ~2%), and free cash flow was negative versus positive net income. The multi-year pattern is volatile (notably negative operating/free cash flow in 2023), suggesting working-capital swings and less consistent cash realization despite reported profitability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.67B	3.20B	2.77B	3.82B	3.61B
Gross Profit	564.06M	580.40M	795.10M	867.50M	1.08B
EBITDA	427.62M	400.40M	368.80M	738.20M	973.50M
Net Income	279.44M	267.10M	255.40M	561.00M	787.20M
Balance Sheet
Total Assets	5.31B	4.83B	4.79B	5.03B	4.79B
Cash, Cash Equivalents and Short-Term Investments	116.79M	258.60M	420.10M	861.60M	1.25B
Total Debt	16.77M	14.50M	188.40M	498.00M	436.90M
Total Liabilities	1.70B	1.33B	1.37B	1.59B	1.17B
Stockholders Equity	3.61B	3.51B	3.42B	3.44B	3.63B
Cash Flow
Free Cash Flow	-11.74M	52.60M	-166.20M	371.80M	763.90M
Operating Cash Flow	27.97M	84.90M	-129.80M	402.30M	784.80M
Investing Cash Flow	26.21M	-45.00M	-42.90M	-29.80M	-18.20M
Financing Cash Flow	-192.68M	-201.40M	-268.80M	-757.50M	-754.10M

Persimmon Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 34.43
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• 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 36.97, below the 50-day MA of 37.97, and above the 200-day MA of 33.69, indicating a bearish trend. The MACD of -2.01 indicates Positive momentum. The RSI at 28.89 is Positive, neither overbought nor oversold. The STOCH value of 5.96 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	$4.33B	22.24	13.58%	―	12.14%	48.68%
MHO	71 Outperform	$3.32B	8.49	12.99%	―	4.77%	-9.30%
KBH	70 Outperform	$3.46B	10.16	10.80%	1.76%	-10.01%	-27.81%
CVCO	66 Neutral	$3.93B	26.87	17.14%	―	15.81%	37.89%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
PSMMY	61 Neutral	$5.14B	15.45	8.05%	4.17%	20.00%	2.62%
MTH	60 Neutral	$4.29B	10.29	8.65%	2.62%	-6.06%	-32.39%