Persimmon stock price soars 6% on an “excellent” start to H2 2020

Shares of Persimmon PLC (LON: PSN) soared 6% on Tuesday after the homebuilder said it has made an excellent start to the second half of 2020. As a result, the firm has proposed a modest dividend.

Fundamental analysis: Strong rebound in summer

Persimmon posted a pretax profit of £292.4 million for the six months to June 30. This is lower by 43% compared to £509.3 million in the year-earlier period. The firm had to stop construction works during the pandemic and lockdowns. 

The first-half sales also plunged to 4,900 units from 7,584 units a year ago.

“Despite the significant disruption, the group’s preparedness, agility and strength ensured a robust first half performance with 4,900 new home completions and further good progress made on our customer care improvement plan,” said Dave Jenkinson, Persimmon’s chief executive.

Revenue plunged to £1.19 billion from £1.75 billion recorded in the same period last year. Persimmon noted that the average new home selling price jumped to £225,066 from £216,942 a year ago. However, the jump in prices was offset by lower sales. 

However, the homebuilder has witnessed an “excellent” start to the second half of the year, with a 50% jump in average weekly private sales rates in July and August.

“Taking an early decision not to take advantage of the furlough scheme for any colleagues, we maintained good momentum in the business, continuing to serve our customers, making detailed preparations for a safe return to work and, when it was appropriate, restarting our build programmes efficiently,” added Jenkinson. 

As a result, Persimmon has proposed an interim dividend of 40p per share. The firm reported the current cash balance of £821 million.

“Further dividend payments this year will remain under close review,” Jenkinson concluded. 

Invezz reported in July that Persimmon share price gained on reports that the UK government is considering tax cuts to support the troubled economy. 

Technical analysis: Impressive bullish run continues

The buyers have continued their impressive performance in August, now totalling gains to over 15%. Following today’s presentations of the first-half results, Persimmon stock price gained around 6% to hit GBX2766, which is a new 5-month high.

The next resistance is located at GBX2780, where the 127.2% Fibonacci extension line – of the July – August correction – sits. A break of this resistance line would pave the way for a potential move to GBX2900, where the 161.8% Fibonacci extension is located. 

Summary

Persimmon share price gained 6% today after the homebuilder said it has made an excellent start to the second half of 2020, which allowed an interim dividend to be declared.