Last Update 28 Nov 25

Fair value Increased 0.63%

VTY: Share Buyback Completion And Housing Venture Will Shape Outlook Ahead

Analysts have modestly increased their average price target for Vistry Group, citing improved revenue growth forecasts and slightly higher profit margin expectations. The new targets range from £5.00 to £6.01 per share compared to previous estimates.

Analyst Commentary

Market experts continue to assess Vistry Group’s outlook, offering insights on both positive drivers and potential risks affecting the company’s valuation and future performance.

Bullish Takeaways

Bullish analysts have nudged up their price targets, reflecting improved confidence in the company’s revenue trajectory.
Recent adjustments point to expectations of slightly higher profit margins, supporting a more favorable long-term growth profile.
Some analysts believe the company’s execution on its current strategy is progressing well, which could justify a higher valuation over time.
The upward revisions, even in a cautious broader market, suggest underlying optimism about Vistry Group's ability to achieve its targets.

Bearish Takeaways

Bearish analysts remain cautious and maintain more conservative ratings even after modest price target increases.
There is continued concern that operational challenges or external market conditions could limit near-term upside for shareholders.
Despite upward revisions, some analysts are wary that the company’s execution might not fully offset risks such as inflation or market saturation.
Some price targets have been reduced slightly, which indicates hesitation over the sustainability of recent growth trends.

What's in the News

Completion of company share buyback: From January 1, 2025 to June 30, 2025, Vistry Group repurchased 5,400,000 shares for £33.1 million. This concludes a total buyback of 7,900,000 shares (2.36% of shares) for £54.5 million as part of the September 2024 program (Key Developments).
Reaffirmed financial outlook: Vistry Group PLC reiterated its earnings guidance for the fiscal year 2025, with expectations of a year-on-year increase in profits and no changes to full-year guidance (Key Developments).
Strategic housing joint venture: Vistry announced a long-term investment partnership with Homes England, creating the Hestia venture to accelerate large-scale residential development across England. The joint venture is supported by £150 million in capital from both partners (Key Developments).

Valuation Changes

Fair Value per Share has risen slightly, increasing from £6.43 to £6.47.
Discount Rate has fallen marginally, moving from 9.97% to 9.94%.
Revenue Growth projection has increased, up from 9.87% to 10.13%.
Net Profit Margin is nearly unchanged, rising minimally from 5.68% to 5.68%.
Future P/E Ratio is stable, moving from 10.23x to 10.21x.

Focus on government-backed affordable housing partnerships aligns with funding trends, likely increasing revenue and profitability through Partner Funded activities.
Streamlined operations and enhanced efficiency measures, including manufacturing output and leaner management, are set to improve margins and earnings.
High net debt and ongoing building safety issues pose risks to financial stability, limiting flexibility and impacting future earnings and shareholder returns.

Catalysts

About Vistry Group

Provides housing solutions in the United Kingdom.What are the underlying business or industry changes driving this perspective?

The company's new Partnerships strategy is aligned with the government's increased focus and funding for affordable housing, which should lead to increased revenue and profitability from Partner Funded activities.
The recent injection of £2 billion into the affordable housing market by the government provides a strong catalyst for growth in Partner Funded projects, potentially boosting future revenue.
The optimization of work-in-progress and enhanced controls to manage stock levels should improve cash generation and operating efficiency, positively impacting net margins and earnings.
Increased output from the timber frame manufacturing facility will drive higher efficiency and align with partner requirements, potentially leading to improved revenue and margins.
A leaner organizational structure and leadership team with a focus on partnerships should enhance operational efficiency and profit margins, leading to better earnings performance.

Vistry Group Earnings and Revenue Growth

Vistry Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Vistry Group's revenue will grow by 7.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.0% today to 5.2% in 3 years time.
Analysts expect earnings to reach £242.9 million (and earnings per share of £0.76) by about September 2028, up from £74.5 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting £268.2 million in earnings, and the most bearish expecting £212.0 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, down from 25.9x today. This future PE is lower than the current PE for the GB Consumer Durables industry at 13.0x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.24%, as per the Simply Wall St company report.

Vistry Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's shift to a partnerships strategy resulted in a significant drop in operating margin, worsened by lower-than-expected volume growth, which could continue to impact net margins negatively if not addressed.
Despite an increase in adjusted revenues, profit before tax fell by 35% due to issues in the South Division and one-time costs, indicating potential volatility in earnings if similar issues arise.
High net debt levels and the intention to maintain some debt going forward may affect financial stability and limit the company's financial flexibility, impacting future earnings and return on capital.
The housing market remains challenging with private sales behind forecasts, which could lead to increased levels of unsold stock and work-in-progress, putting further pressure on cash flow and net earnings.
Building safety issues and associated exceptional costs pose ongoing risks, with net cash outflows expected to continue, potentially affecting net margins and shareholder returns.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £6.2 for Vistry Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £7.73, and the most bearish reporting a price target of just £4.5.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £4.7 billion, earnings will come to £242.9 million, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 9.2%.
Given the current share price of £5.96, the analyst price target of £6.2 is 3.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

VTY: Incoming Residential Partnerships And Share Buyback Will Drive Measured Improvements