Down 67% with a P/E of 7.8. Is this a once-in-a-decade opportunity to buy this depressed FTSE 250 stock?
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They have no stake in this FTSE 250 the stock had a rough week. In fact, they haven’t had much to be happy about in the last 18 months or so. From August 2024 until now (March 9), the club’s price has dropped by 67%.
But sometimes the stock-down can be a bit much. Can this happen here? Let’s talk.
What’s going on?
The Vistry Group (LSE:VTY) was punished by investors last Wednesday (4 March). Its share price fell 25.6% following the publication of its 2025 results. Shares of the homebuilder last traded at this level in November 2012. Almost 14 years of going nowhere is very disappointing.
The events of the past week are particularly depressing considering that shareholders thought this team was very bad.
In October 2024, Vistry issued a profit warning after discovering that some of its cost estimates were incorrect. Sadly, after just four weeks, it had to be announced that the situation was worse than the team had initially thought. A third warning followed in December 2024, following a deterioration in trading conditions.
But a closer look at the group’s 2025 results shows that investors may have overreacted last week. At 59.3p, adjusted earnings per share were 6% higher than in 2024. The stock now trades at an attractive historical earnings of 7.8.
However, the group warned that it is hiring “target price and sales allowances“, which will result in “absolute lower limit” this year. However, it expects to end 2026 in a surplus position.
What I suspect has angered the City the most is the decision to suspend its share buyback program. The group stopped its distribution in 2023, diverting the savings to buy back its own shares. This policy has been canceled as the group plans to use its remaining funds to reduce debt.
A different business model
The group is unusual in that its main focus is affordable housing, often described as “houses for sale or rent for those whose needs are not met by the market“. By 2025, it will build one in seven of this type of buildings in the country. It should therefore benefit from the government’s £39bn Social and Affordable Homes Program (SAHP), which will run for 10 years until 2036.
Even if the group does not receive funding, many of its clients – including Registered Providers and Local Authorities – may be successful. This partnership accounted for 74% of completion by 2025.
Despite its recent woes, I think Vistry is worth a closer look. It maintains a strong balance sheet and has an order book worth £4.5bn. And despite the difficult market conditions, it managed to increase its average sales price in 2025.
But it may take a while before things start to improve so the stock is attractive only to patient investors. I’m sure the team will be successful in bidding for SAHP cash – nobody in the market comes close to matching the size and scale of Vistry. But with the bureaucracy and all the red tape associated with government contracts, I suspect it will be a few years before these buildings are built.
However, on balance, I think the stock is worth considering for long-term investors.
