Persimmon: What We Think of the Stock After Earnings

Key Morningstar Metrics for Persimmon

• Fair Value Estimate
  : GBX 1,280
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : High

What We Thought of Persimmon’s Earnings

Persimmon PSN reported 2026 first-half results with headline completions and average selling price ahead of our expectations. It now expects to deliver 12,500 completions in 2026—at the upper end of the previously guided range—and for profit before tax to be in line with consensus expectations.

Why it matters: UK homebuilders remain under pressure with resurgent build-cost inflation impacting their margin outlook and higher mortgage rates weighing on affordability and therefore demand.

• However, we continue to believe that Persimmon is best insulated from these external factors given its lower average selling price, geographic footprint, and industry-leading build-cost efficiency. Overall, this is another set of resilient operating results from Persimmon.

The bottom line: We update our 2026 forecasts to reflect higher completions and average selling prices but lower margin expectations. This nets off, and we maintain our GBX 1,280 fair value estimate. Shares are still marginally undervalued at current levels, having rallied around 16% from July lows.

• We still expect gross and operating margins to contract in 2027 owing to mid-single-digit build-cost inflation, but thereafter, margins can recover as newer land is utilized and volumes pick up meaningfully.

Big picture: Relative to our fair value estimate, Barratt Redrow now screens as most attractive even after rallying 30% from June lows. With new management and activist shareholders calling for buybacks, we see the narrative shifting on the name.