Will a ‘culture overhaul’ translate to a stronger Persimmon share price?

first_img Our 6 ‘Best Buys Now’ Shares “This Stock Could Be Like Buying Amazon in 1997” Enter Your Email Address Image source: Getty Images. Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Karl Loomes | Friday, 28th February, 2020 | More on: PSN center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Will a ‘culture overhaul’ translate to a stronger Persimmon share price? Karl has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. The last few years haven’t seen the best environment for UK housebuilders. With low interest rates and concerns surrounding Brexit, house prices and housebuilding have both stagnated. The last thing a company needs is a bad public image or controversy hurting its share price, but this is the exact situation Persimmon (LSE: PSON) has found itself in.What’s worse, the complaints against the company extended to the houses it builds. A firm may be able to weather a social-controversy storm, but a buoyant share price won’t last long if its products are sub-par.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The complaintsAn independent report by barrister Stephanie Barwise, released in December, showed a number of damming aspects for Persimmon. The company was seen to have a ‘box-ticking’ culture with barely any systems in place to inspect work in progress.Even worse, the report found that some of its buildings had potential fire hazards; specifically that it has a “nationwide problem of missing and/or incorrectly installed cavity barriers in its timber frame properties”. It also noted a short-term cultural outlook, with a focus on buying as much land as possible for quick sales – not on the business of being a housebuilder. Interestingly until this week, these revelations have been mostly ignored by the market, though since last week the share price is down about 12%.The solutionThe company said it has “embraced” the recommendations made in the report and will now begin a process of implementing them. In January it said it expects revenues to fall 2.4%, saying this reflected “the action being taken to ensure the group delivers improved levels of quality and service”.Persimmon said it still expects pre-tax profits to be in line with the market consensus, slightly lower than those of 2018. One would expect costs associated with a culture overhaul (not to mention improved working practices) to hit the bottom line before the top, so I suspect the true costs of these improvements have yet to show in the company accounts, something investors should be wary of.One fairly pioneering tool it’s using to help customer retention, as well as “improving the quality and service delivered to our customers”, is allowing buyers of its new-builds the right to hold back 1.5% of its total purchase value to allow for “snagging issues” This has, in fact, been in place since long before the report, and I think in terms of the specifies laid out by Barwise, the markets may need to see a lot more done to assure customers, and of course shareholders.From the shareholder and potential investor point of view, the company has a history of offering enticing dividend payouts. Normally a good thing, I have always been cautious of such high payouts though (yielding 12% at some stages), and in all honesty often take them as a red flag.I think Persimmon will be able to get over this report, if and only if, it actually implements real change and removes all doubt in the mind of the customer. For now though, I think there are just far too many uncertainties, not least with the costs of this turnaround, to make Persimmon an appetising investment. I think its shares have some more downside left in them yet. See all posts by Karl Loomeslast_img

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