In just one morning, shares in Persimmon (PSN) recovered all the losses sustained since the beginning of the year, rising nearly 10 per cent. And it’s not hard to see why. With net cash of £1.3bn, the housebuilder is proposing to make additional payments of 125p a share for the next three years, which means that the original capital return plan worth 620p a share has been more than doubled to 1,300 a share.
Performance metrics were all impressive, notably operating margins that climbed from 24.8 per cent to 28.2 per cent, while the return on average capital employed was up from 39.4 per cent to 51.5 per cent.
And despite all the worries aired over Brexit, rising interest rates and a squeeze on disposable income, in the real world, customer numbers are on the rise. So, in the first eight weeks of the current year private sales were up 7 per cent. Inevitably, the increase in output has highlighted the shortage of skilled labour and some materials. To meet these constraints, it is establishing its own brick plant, and is working towards having its own roof tiles facility. In addition, Space4 modular output continues to grow.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to December 2018 of £1.05bn and EPS of 265.6p (from £976m and 256p in 2017).
| PERSIMMON (PSN) | ||||
| ORD PRICE: | 2,737p | MARKET VALUE: | £8.45bn | |
| TOUCH: | 2,736-2,737p | 12-MONTH HIGH: | 2,901p | LOW: 2,007pp |
| DIVIDEND YIELD: | 4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 1,036p | NET CASH: | £1.3bn | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 2.10 | 337 | 85 | 70 |
| 2014 | 2.60 | 467 | 122 | 95 |
| 2015 | 2.90 | 630 | 170 | 110 |
| 2016 | 3.14 | 775 | 203 | 110* |
| 2017 | 3.42 | 966 | 255 | 110** |
| % change | +9 | +25 | +26 | - |
| Ex-div: | 14 Jun | |||
| Payment: | 2 Jul | |||
*Not including additional dividend of 25p a share **Doesn't include surplus capital payment of 125p a share payable on 29 March 2018 – ex-date is 8 March 2018 | ||||
