Investing.com -- Persimmon ’s (LON:PSN) stock jumped over 3% on Tuesday following its fiscal year 2024 results, which exceeded market expectations.
The housebuilding company delivered a stronger-than-expected performance, surpassing consensus estimates and demonstrating resilience in the face of macroeconomic uncertainties.
The adjusted profit before tax exceeded market expectations by 2.6%, coming in at £395.1 million compared to the consensus forecast of £385 million.
The company reported a total of 10,664 completions, aligning with its previously stated guidance from the January trading update.
For fiscal year 2025, Persimmon projects completions in the range of 11,000 to 11,500, aligning closely with the consensus estimate of 11,256.
The first nine weeks of 2025 have already shown encouraging momentum, with the net private sales rate per outlet per week rising to 0.67, a 14% year-over-year increase.
Additionally, the private forward order book stands at £1.15 billion, reflecting a notable 27% increase compared to the previous year, including a 3% rise in average selling price.
Persimmon remains focused on growth initiatives, including vertical integration and the expansion of its Charles Church brand.
The company has set a medium-term ambition of achieving a 20% operating margin and a 20% return on capital employed.
While macroeconomic uncertainties persist, particularly regarding regulatory changes and inflationary pressures, Persimmon expects to keep build cost inflation to low single digits over the coming year.
From a valuation perspective, Persimmon currently trades at 1,171p per share, representing a 19% premium to the sector average price-to-tangible book value (P/TBV) multiple of 0.90x.
The company also offers an attractive dividend yield of 5.1%, well above the sector average of 3.9%.
Analysts at RBC Capital Markets have assigned an "underperform" rating to the stock with a price target of 1,325p, citing concerns over macroeconomic headwinds and regulatory risks, but acknowledging the company’s strong operational execution and forward-looking strategies.
Persimmon maintains a cautiously optimistic outlook for the future. The company forecasts an underlying operating margin of 14.2% to 14.5% in 2025, reflecting a modest increase of 10 to 40 basis points.
It also projects net cash levels to range between £nil and £200 million, aligning with the Visible Alpha consensus estimate of £167 million.
Meanwhile, ongoing discussions surrounding the Planning and Infrastructure Bill could act as a catalyst for the housing sector, potentially offering additional momentum for Persimmon’s growth, said RBC.
Analysts at RBC Capital Markets remain cautious about broader market conditions. The company’s ability to achieve its ambitious medium-term targets will hinge on factors such as house price inflation, regulatory shifts, and overall market demand.