Is There Now An Opportunity In Persimmon Plc (LON:PSN)?

Today we're going to take a look at the well-established Persimmon Plc (LON:PSN). The company's stock received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£28.83 at one point, and dropping to the lows of UK£23.51. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Persimmon's current trading price of UK£24.45 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Persimmon’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Persimmon

What's the opportunity in Persimmon?

Great news for investors – Persimmon is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £35.42, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Persimmon’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Persimmon generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 3.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Persimmon, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since PSN is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PSN for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PSN. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you want to dive deeper into Persimmon, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Persimmon, and understanding it should be part of your investment process.

If you are no longer interested in Persimmon, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.