With H1 profits back on track, is this FTSE 250 housebuilder ready to bounce back?

Vistry (LSE:VTY) launched its buying and selling replace for the primary half of 2025 this morning (10 July). And whereas the numbers don’t look thrilling, the FTSE 250 inventory affords plenty of room for optimism.

Within the context of an organization that’s issued a lot of revenue warnings within the final yr, that’s most likely one thing of a reduction. So is the inventory set to bounce again?

Modest outcomes

Vistry’s adjusted working revenue got here in at £125m. That’s a decline of round 22% from the earlier yr, however in keeping with the agency’s most up-to-date steerage (which administration reiterated)..

An enormous cause for the drop is the fee points from its South Division the corporate reported in October 2024. The implications of this are set to weigh on earnings in 2025 and 2026. 

Completions within the first half of 2025 had been additionally down round 13%. And the next proportion of those being for the open market, somewhat than accomplice schemes additionally affected earnings. 

A ahead order guide that fell from £5.1bn a yr in the past to £4.3bn additionally represents one thing of a decline. However there are causes to be constructive. 

Optimistic outlook

Regardless of the uninspiring numbers, there have been two major causes for positivity with Vistry’s newest outcome. The primary is the corporate appears to have put its accounting points firmly behind it. 

The continuing impression on earnings is unwelcome. However after three revenue warnings within the area of as many months, it’s encouraging to see that issues have been regular because the begin of 2025. 

There’s additionally cause to be optimistic on the expansion entrance. Vistry ought to be in a powerful place to learn from a brand new £39bn Inexpensive Houses Programme from the UK authorities.

The agency’s partnerships with native authorities and housing associations are a key a part of its long-term plans. And this can be a cause for real optimism – somewhat than simply reduction.

Turnaround time?

Within the brief time period, there are some essential dangers to contemplate. One is greater lumber costs pushing up prices and one other is rates of interest remaining elevated and weighing on demand.

However Vistry has a bonus over its rivals on the subject of these points. Its partnerships assist shield it from greater enter costs whereas decreasing its dependence on the open market.

The Vistry share value is at present 50% under the place it was a yr in the past. However the enterprise might be set for a giant double enhance that I believe might ship the inventory a lot greater. 

As the results of costing points are changed by authorities stimulus, earnings might climb sharply over the following couple of years. And traders would possibly think about shopping for the inventory earlier than this occurs.

Ought to I purchase?

My view on UK housebuilders hasn’t truly modified a lot over the past yr. A big quantity – together with Vistry – are nonetheless underneath investigation by the Competitors and Markets Authority.

Whereas that is the case, I view the sector as uninvestable. Others would possibly really feel in a different way, however I’m not prepared to take a danger on an unsure danger that might end in unspecified potential losses.

When that case resolves, nonetheless, issues might be very totally different. And if it emerges with no recent points, Vistry is becoming a member of my checklist of shares to purchase at that time.