As of June 20, 2025, Persimmon PLC's estimated intrinsic value ranges from $555.33 to $1823.15 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $555.33 | -57.9% |
| Discounted Cash Flow (5Y) | $707.15 | -46.4% |
| Dividend Discount Model (Multi-Stage) | $671.03 | -49.2% |
| Dividend Discount Model (Stable) | $648.26 | -50.9% |
| Earnings Power Value | $1823.15 | +38.1% |
Is Persimmon PLC (PSN.L) undervalued or overvalued?
With the current market price at $1320.00, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Persimmon PLC's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.47 | 2.06 |
| Cost of equity | 12.8% | 19.4% |
| Cost of debt | 4.6% | 4.6% |
| Tax rate | 21.4% | 24.2% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 8.2% | 11.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $707 | $1,823M | 70.7% |
| 10-Year Growth | $555 | $1,376M | 39.8% |
| 5-Year EBITDA | $1,097 | $2,970M | 82.0% |
| 10-Year EBITDA | $1,049 | $2,829M | 70.7% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $487M |
| Discount Rate (WACC) | 11.4% - 8.2% |
| Enterprise Value | $4,266M - $5,951M |
| Net Debt | $(259)M |
| Equity Value | $4,524M - $6,210M |
| Outstanding Shares | 3M |
| Fair Value | $1,537 - $2,109 |
| Selected Fair Value | $1823.15 |
| Metric | Value |
|---|---|
| Market Capitalization | $3886M |
| Enterprise Value | $3627M |
| Trailing P/E | 14.55 |
| Forward P/E | 13.43 |
| Trailing EV/EBITDA | 8.15 |
| Current Dividend Yield | 469.56% |
| Dividend Growth Rate (5Y) | -14.00% |
| Debt-to-Equity Ratio | 1.00 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $166.60 |
| Discounted Cash Flow (5Y) | 25% | $176.79 |
| Dividend Discount Model (Multi-Stage) | 20% | $134.21 |
| Dividend Discount Model (Stable) | 15% | $97.24 |
| Earnings Power Value | 10% | $182.32 |
| Weighted Average | 100% | $757.15 |
Based on our comprehensive valuation analysis, Persimmon PLC's weighted average intrinsic value is $757.15, which is approximately 42.6% below the current market price of $1320.00.
Key investment considerations:
Given these factors, we believe Persimmon PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.