- Housebuilder raises guidance for completions in 2026
- Increased forward sales and good start to the year both boost the outlook
- Net cash pile supports unchanged dividend payment
- Oil prices and mortgage rates could yet intervene to shape sentiment toward the stock
“The FTSE 100 housebuilder Persimmon is named after the horse that won the 1896 Epsom Derby and the shares are off at a gallop after improved sales activity and a higher forward order book mean the company is confident enough to increase its guidance for the coming year to between 12,000 and 12,500 homes, up from the previous steer of around 12,000,” says AJ Bell investment director Russ Mould.
“A rapid end to the conflict in Iran could also be a further boost, as that might help to put a lid on oil prices, inflation expectations and interest and mortgage rates, where markets are starting to fret about increases rather than look forward to measured reductions from the Bank of England and major lenders, respectively.
“Persimmon did its bit for the Labour government’s plan to boost housebuilding volumes in 2025, with a double-digit percentage increase in completions, while a near-4% advance in average selling prices helped the York-headquartered company to boost its profits, despite an additional £40 million charge for cladding remediation and fire safety.
Source: Company accounts. *2026E based on mid-point of management guidance for completions.
“Policymakers may be less pleased to see 2025’s completions come in lower than they did in 2005, although the management teams of the big builders are likely to rail against planning processes and regulation by way of a retort.
“Moreover, Persimmon does feel able to raise its guidance for completions to between 12,000 and 12,500 in 2026, up from its previous steer of 12,000, enough for a third consecutive annual increase.
“A strong start to 2026, with average sales per outlet per week of 0.73, up from 0.67 in the same period a year ago and 0.70 across the whole of last year, and an increase in the order book underpin this more confident outlook.
“Management is also hopeful there will be no further acceleration in cost inflation, and that cost control will help to support margins. As a result, chief executive Dean Finch believes that 2026’s operating profit will come in toward the top end of the forecast range, even if pre-tax profit is on course to meet forecasts, thanks to higher interest costs as Persimmon spends and invests for future growth.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“Profits and profit margins are nowhere near those of the go-go days of Help to Buy, when the scheme inflated demand but not supply, with the inevitable impact on prices, but they are also on course for a third straight increase.
“The lower profitability compared to the boom explains why Persimmon is being more careful with its dividend, after the thumping payouts of a few years ago.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“The combination of those bumper payouts and land acquisition has whittled down Persimmon’s net cash pile from a peak of £1.3 billion in 2017 to £117 million. The firm continues to increase inventory and invest in its land bank and competitive position in the marketplace as it awaits a more helpful macroeconomic backdrop. As and when the turn comes, increased completions will reduce that inventory and release cash.
Source: Company accounts
“Further reductions in Bank of England base interest rates could help to boost demand, although the war in the Middle East and volatile oil and gas prices are an additional complication here.
“In the meantime, the robust balance sheet will help to support the business through any growth hiatus, and the asset backing could help to back up the share price, too.
“Persimmon’s £4.2 billion stock market capitalisation compares to net assets on the balance sheet of £3.4 billion, equivalent to around £10.70p a share.
“That means Persimmon’s shares trade on 1.2 times historic net asset, or book, value per share. This multiple is the highest currently afforded by investors to any of the quoted builders, although those at the cheaper end have all offered disappointing guidance or updates in one way, shape or form at some stage in the past few months.
