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From Apple News - https://stocks.apple.com/AbYFLmCpMS36TVPSquUWE6w
Persimmon Earnings: Shares Remain Materially Undervalued Despite Tepid 2024 Cyclical Recovery
While the cyclical recovery of Persimmon’s earnings is underway, the rebound in earnings in 2024 is shaping up to be more gradual than we’d previously forecast. Sales activity is improving, but at a more modest pace than we’d previously anticipated, thereby pointing to a softer second-half performance for Persimmon than reflected in our 2024 estimates. Year to date, the weekly private home sales rate on Persimmon’s development sites is ahead of last year—at 0.59 homes per active sales outlet in the first 10 weeks of 2024. While encouraging, the improvement is modest relative to 0.54 homes per active outlet in the prior corresponding period and likely holding back second-half volumes. In response to the more modest improvement in homebuyer appetite, Persimmon has—similar to its peers—continued with the use of sales incentives in 2024, which will restrain the extent to which profit margins recover in 2024, further holding back the near-term recovery in earnings for the no-moat homebuilder.
Persimmon delivered 9,922 home completions in 2023, aligning with our forecast for a 33% year-on-year decline in volumes in the face of decidedly downbeat UK housing market conditions. Consequently, full-year EBIT of GBP 355 million contracted 65% year on year and also tracked about 6% soft relative to our forecast as second-half build costs proved less favorable than we’d previously expected.
We expect to lower our 2024 estimates with Persimmon’s 2024 home completion and profit margin guidance tracking softly relative to our prior expectations, which factored in a swifter return of homebuyer confidence. Persimmon expects to deliver 10,000-10,500 homes in 2024, about 8% below our prior expectations at the midpoint. Still, Persimmon shares remain attractive, trading at a 42% discount to our GBX 2,300 fair value estimate, which we don’t expect to change materially after downwardly revising our 2024 financial estimates.
Two divs a year stevebt
It says 40p on the persimmon investor page and when I saw that I knew the share was dropping lots
52 buy close :-)
"I guess you received the same confusing message from DividendMax regarding the 40p?! In the RNS and the related news I read everywhere 60p like last year."
60p total for the year. 20p already paid as interim. 40p to be paid.
Finch purchasing 100k worth is good enough for me. Decent chunk, worst should be over and less face it we can't keep up with the housing shortage. GLA
Lovely jubbly
love bargains TOP up time again let me have your shares
I guess you received the same confusing message from DividendMax regarding the 40p?! In the RNS and the related news I read everywhere 60p like last year.
Almost every share I hold always takes a hit on results day, Must change strategy and sell before in future, I would be a lot richer
40p ?
Fair point Krustysmegma
"In 2024, Persimmon expects to use its GBP700 million revolving credit facility and to move from an average net cash position to an average net debt position. "
This is a big negative to me, and it's why the SP is marked down because of the poor update.
"Maintaining the dividend which I thought was very positive"
I'm with Krustysmegma. In the current climate I'd prefer the company to preserve capital as Barratt is doing.
...maintaining the dividend whilst planning for net debt this year though, does that make sense? Everybody likes a dividend, but only if it's sustainable.
Maintaining the dividend which I thought was very positive
Market not enthralled with results. Wasn't too bad but on the other hand not much to shout about either. Full yr (and next they say) @ 4.5% on yesterday price. Pretty average by FTSE standard but well down on what we have got used to with PSN. With a wait until June for the next ex div and it only being 2.5% ish on yesterday price, maybe people are bailing out for greener pastures. It has turned more of a recovery play rather than income. Let's see if she recovers....
I guess the unknown is the total legacy from remediating buildings when there is such a long exposure period. Add to this the recent change for non combustible buildings now having an 11m height not 18m height means councils will be looking at buildings between 11 and 18 M in height. If you seek, you shall find. With 40 x the number of multi occupancy buildings between 11 and 18 M, the unknown exposure will be around for a while. As a share holder hoping the pent up demand evens some of this out
@driftking
The UK house builders were strong armed by the snake Gove to remediate the cladding c**k ups, when it was the fault of British standards, regulations etc, so the bill should have been picked up by the taxpayer.
however (rant over!) this would have dented the price for the last year, until the works are complete, it is only estimated how much this will hamstring the builders. I expect there are other factors, as stevebt points out, and the economic cycle does not favour house builders ATM.
OIL wise, Shell and BP were amongst the first shares I bought in my SIPP many years ago. "Never sell Shell" was a stoke market adage, well I did when they slapped the windfall tax on 'em, sold NG, and SSE as well 'coz these Tories are bad, but Labour may well, if not re-nationalise, windfall tax anything that shows a profit and doesn't move!
Who is interested in states house builders ? two different economies
Look at last 5yrs that’s nothing to do with interest rate rises .
KBHomes was on a front footing from 2019… still outperformed 196%!!!! To being down 39% in 5yrs??
I'm expecting the share to drop more as that's what happens in todays market when people annouce trading udates. Maybe the announcement of a good dividend could pull this share around? If they annouce a minimum 60p dividend it means over the full year it would of cost them £255mln which is well within their profits with plenty left over for them to keep for some little share buy backs?
I read somewhere that the US market isnt affected as much by interest rate hikes as its normal for people to take out a 25year fixed rate mortgage.
So, not here to put a downer on this stock, but can someone explain to me why UK house builders have underperformed US counterparts drastically?
KBHomes has risen 196% in 5yrs ( US biggest housebuilder $5.2bn ) opposed to both BDEV & PSN
PSN down 39%
BDEV down 21%
Or is it just US & UK equities in general?
Iv been in stockmarket since 2002…
Oilies are the same
If we compare some gains here v UK stocks from 1994 to 2023 October 26th
XOM +750% plus dividends( USA)
SHEL 144% plus dividends in that period
BP. 320% plus dividends
CVX. 700% plus dividend's (USA)
OXY. 5800%! plus dividends
Me too, investing.com and bar chart still have this as a buy/strong buy
I am happy to buy at this price.:-)