Jump to content

Persimmon and Taylor Wimpey earnings to shed light on housebuilders


MongiIG

Recommended Posts

Taylor Wimpey and Persimmon earnings look to bring greater clarity on how the housebuilders are faring in the face of rising interest rates

bg%20building%20house%20construction%20hSource: Bloomberg
 
 Joshua Mahony | Senior Market Analyst, London | Publication date: Monday 27 February 2023 

Housebuilders in focus as investors await rate hike implications

The housing sector comes back in the spotlight this week, with earnings from Persimmon and Taylor Wimpey on Wednesday and Thursday respectively. Historically speaking, the housing sector has typically been protected during downturns, with governments aware of the negative economic implications if housing assets collapse in value. Unfortunately, the rampant inflation seen over the course of this crisis has left the Bank of England with little alternative than to ramp up rates in a bid to drive down CPI. This clearly poses a threat to the housing sector, with soaring mortgage rates dampening demand and lowering potential borrowing levels. Meanwhile, economic struggles will typically bring economic hardship, raising the likeliness of a house price collapse that in turn weakens demand and pricing power for housebuilders. Unfortunately, they are also squeezed from both sides, with the prospect of lower prices coming as rising costs dent margins. The chart below from the Rightmove HPI survey does highlight how interest rates have impacted the costs associated with home ownership.

Rightmove270223.PNGSource: Rightmove

Data-wise, we have seen some jitters from the housing market, with the latest Rightmove fourth consecutive negative reading (-0.6%) bringing the most pessimistic view. Meanwhile, mortgage approvals have slumped to the lowest level since mid-2020, and housing completion data from the HMRC showed the lowest number since 2015. However, expectations of a wider collapse for the economy appears to be holding off for now, with some speculating that the widely anticipated recession may not occur at all. Nonetheless, with US inflation showing signs of stalling, there is a fear that central banks will find it difficult bringing CPI down towards target, dampening hopes of a swift pivot in monetary policy later in the year.

Persimmon

Persimmon report their full-year earnings on Wednesday 1 March, with traders keeping a close eye on the latest revenues, profits, and the outlook for the year ahead. We have already been provided a significant amount of data within the recent trading update, with sales and average prices both rising over the course of the year. However, forward sales are a clear concern, highlighting the likely focus the company’s outlook on Wednesday.

psmtuPDATE270223.PNGSource: Persimmon

The housebuilder is forecast to announce full-year revenues of £2.2 billion (+4.5%), thanks in no small part to an expected 25% jump in H2 revenues. Profits before tax are expected to rise from £966.8 million to £998.8 million (+3.3%). Finally, the earnings per share figure is predicted to come in at £2.43, compared with £2.47 for 2021. Looking at the analyst recommendations, it is clear that the concern around the sector brings plenty of uncertainty. A wide spread of views does centre around a majority of 10 analysts taking on a ‘hold’ view.

Persimmonrecs270223.PNGSource: Eikon

Persimmon shares have been heading lower over the course of this month, with price falling towards the £13.65 support level. A break below that level would bring about expectations of further downside, ending the recent recovery phase. However, it makes sense to be aware of a potential rebound from this recent descending channel, with a positive earnings report bringing the potential for a bullish breakout. A move through £14.77 would bring greater confidence of a bullish breakout and continuation of the bullish trend seen over the course of 2023 thus far.

PSN-Daily-2023_02_27-17h43.pngSource: ProRealTime

Taylor Wimpey

Taylor Wimpey report on Thursday 2 March, coming off the back of a largely mixed trading statement released last month. Completions and the average sale price were lower than in 2021, while the order book value of £1.94 billion is also below the £2.55 billion seen in December 2021. Looking ahead to Thursday, markets are expecting to see full-year revenues of £4.44(+3.6%), with pre-tax profits of £886 million (+10%). Earnings per share are forecast to rise an impressive 7.7% to 19.39p. Analysts are relatively positive for the stock, with 12 of 19 providing some form of buy rating.

TWAnalysts270223.PNGSource: Eikon

Looking at the chart, the company has been on a strong run of late, with price gaining 55% since the September low. That bullish trend relies on the continued trend of higher lows. As such, a bullish outlook holds unless price falls back below the £1.13 support level.

TW-Daily-2023_02_27-18h10.pngSource: ProRealTime
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Imagine stepping into a world where every game you play is not just about entertainment, but about unlocking real rewards and experiences that resonate with you on a personal level. That's the magic of Game-Fi projects, where the boundaries between gaming and finance blur, creating an immersive universe where players are not just participants but pioneers of a new era. In the midst of this gaming revolution, there's a project that's been making waves for all the right reasons: NADA Protocol $NADA. Recently, I found myself diving deep into the realm of emerging Game-Fi projects, and NADA caught my eye like a hidden treasure waiting to be discovered. It's more than just another token; it's a symbol of possibility, offering gamers a glimpse into a future where their passion translates into tangible rewards. Let me take you on a journey through the world of NADA Protocol, where innovation meets excitement, and where every move you make could be the key to unlocking a world of endless possibilities. 1. Rewards Beyond Imagination: NADA Protocol isn't just another token; it's a ticket to a world where every move, every triumph, is rewarded. Imagine playing your favorite games and earning tokens simply for doing what you love. With NADA, that dream becomes a reality. 2. Trailblazing Roadmap: What sets NADA apart is its ambitious roadmap, charting a course towards a future where gaming and rewards intertwine seamlessly. With plans to integrate into future games, early adopters of the native token stand to reap massive rewards down the line. 3. Korean Innovation: Behind the scenes, NADA is powered by none other than NADA Digital Co., Ltd., a powerhouse in the Korean gaming industry. With a proven track record and global recognition, NADA Digital Co., Ltd. brings a level of expertise and reliability that sets NADA apart from the competition. 4. Global Validation: It's one thing to dream big, but NADA has the track record to back it up. With a presence in the global market and validation from players worldwide, NADA isn't just a promising project – it's a force to be reckoned with. 5. Exchange Expansion: The anticipation builds as NADA gears up for listing on top exchanges like Bitget. With increased accessibility and liquidity, NADA is poised to make waves in the Game-Fi space, captivating audiences and investors alike.  What are your thoughts, let's discuss? 
    • Hi There - Any update on this??? Or is it time to move my accounts to a platform that can provide DRIPs?
    • Hi There - Any update on this??? Or is it time to move my accounts to a platform that can provide DRIPs?  
×
×
  • Create New...
us