Is the Persimmon (PLC Stock) share price on solid ground?


Since hitting a one-year high in June, the Persimmon share price has slowly declined, as the air slowly comes out of the rebound that has been in place for most of the past 12 months.

Stocks are still up to date since the start of the year but have lagged behind their peers in the FTSE100, Taylor Wimpey and Barratt Developments.

Profits and sales were good, but they were mainly driven by the various stamp duty reliefs, which began to be cut in July.

This anticipation of slower sales may well be the cause of the recent drop in the stock price, which appears to have found some support at 2834p.

The housing market has played a major role in the recent recovery of the UK economy. Some would say it was too big a factor, but home builders were able to thrive despite higher costs due to Covid, with Persimmon able to improve new build margins to 27.6%.

In April, Persimmon said he had made a good start to the year, with futures sales of 23% before 2020 and 2019 as well. Demand levels have been good, with stamp duty cuts helping to push up prices and stimulate activity.

Today’s first half revenue was as expected at £ 1.84bn, a decent increase from £ 1.19bn last year, but this comparison has been affected by year-end disruptions due to the first lockdown.

First half after-tax profits reached £ 391.2million, putting the company on track to surpass last year’s profit figure.

Average private sales are also higher, 30% higher than in 2020 and 20% before 2019.

Deliveries rose to 7,406 as expected, while average selling prices rose 4.9% to £ 236,200, helping to ease upward pressure on the cost base.

Futures sales were also positive, up 9% from 2019 levels at £ 2.23bn, from £ 1.86bn in 2020.

Even with the reduction in stamp duty relief, management appears optimistic about the long-term strength of the housing market, with the company planning to begin work on 85 new outlets in the second half of this year, and a similar amount in In the first half of 2022, the pipeline appears solid, subject to demand.

On shareholder returns, the company said it plans to revert to its pre-pandemic practice of two payments per year, with the first payment of 125p being made in early July 2022.

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