Vistry (LSE:VTY) released its trading update for the first half of 2025 this morning (10 July). And while the numbers don’t look exciting, the FTSE 250 stock offers a lot of room for optimism.
In the context of a company that’s issued a number of profit warnings in the last year, that’s probably something of a relief. So is the stock set to bounce back?
Modest results
Vistry’s adjusted operating profit came in at £125m. That’s a decline of around 22% from the previous year, but in line with the firm’s most recent guidance (which management reiterated)..
A big reason for the drop is the cost issues from its South Division the company reported in October 2024. The implications of this are set to weigh on profits in 2025 and 2026.
Completions in the first half of 2025 were also down around 13%. And a higher proportion of these being for the open market, rather than partner schemes also affected profits.
A forward order book that fell from £5.1bn a year ago to £4.3bn also represents something of a decline. But there are reasons to be positive.
Positive outlook
Despite the uninspiring numbers, there were two main reasons for positivity with Vistry’s latest result. The first is the company seems to have put its accounting issues firmly behind it.
The ongoing impact on earnings is unwelcome. But after three profit warnings in the space of as many months, it’s encouraging to see that things have been steady since the start of 2025.
There’s also reason to be optimistic on the growth front. Vistry should be in a strong position to benefit from a new £39bn Affordable Homes Programme from the UK government.
The firm’s partnerships with local authorities and housing associations are a key part of its long-term plans. And this is a reason for genuine optimism – rather than just relief.
Turnaround time?
In the short term, there are some important risks to consider. One is higher lumber prices pushing up costs and another is interest rates remaining elevated and weighing on demand.
But Vistry has an advantage over its rivals when it comes to these issues. Its partnerships help protect it from higher input prices while reducing its dependence on the open market.
The Vistry share price is currently 50% below where it was a year ago. But the business could be set for a big double boost that I think could send the stock much higher.
As the effects of costing issues are replaced by government stimulus, profits could climb sharply over the next couple of years. And investors might consider buying the stock before this happens.
Should I buy?
My view on UK housebuilders hasn’t actually changed much over the last year. A large number – including Vistry – are still under investigation by the Competition and Markets Authority.
While this is the case, I view the sector as uninvestable. Others might feel differently, but I’m not willing to take a risk on an uncertain risk that could result in unspecified potential losses.
When that case resolves, however, things could be very different. And if it emerges with no fresh issues, Vistry is joining my list of stocks to buy at that point.
