After falling 57% in the last three months of 2024, the Vistry (LSE:VTY) share price is up 5% after the company’s first trading update of 2025 on 15 January. And the news is generally positive.

Management is confident last year’s issues are in the past and the outlook for sales is relatively positive. But there was something missing from the report that caught my attention. 

Results and outlook

Vistry’s share price has been falling recently because of cost issues in its South Division. Partly – though not entirely – as a result of this, the firm’s pre-tax profits in 2024 fell from £419m to £250m.

Elsewhere, the business looks to be in decent shape. The company completed 7% more units in 2024 than the previous year, with adjusted revenues up 9% and it’s expectign further growth in 2025.

Inflation is set to increase build costs and Employer National Insurance Contributions are set to increase by £5m. But both look relatively modest in the context of the overall business.

That’s why the stock is climbing. But I think Vistry’s real strength is its business model, which is what differentiates it from the rest of the FTSE 100 and FTSE 250 housebuilders. That could boost the share price.

Partnerships

Vistry has less exposure to the open market than other UK housebuilders. Instead, it prefers to partner with investment firms and local authorities to build directly to order. 

This has two big benefits for the business. The first is that it reduces the amount of cash the company requires, with partners financing some of the up-front build costs. 

The second is that it provides guaranteed offtake for completed projects. With sales already agreed, Vistry doesn’t have to worry in the same way about weak demand in the housing market.

The company’s top priority for 2025 is continuing to invest in this – and I think it’s a really attractive business model. But there was something else in the latest update that caught my attention. 

Capital allocation

In its update from 8 November (which was essentially a profit warning), Vistry said the following:

[The firm] remains committed to its medium-term targets including the distribution of £1bn of capital to its shareholders. In light of the recent issues in the South  Division, the group is reviewing the timeframe in which these are expected to be achieved.

With the company’s market cap currently £1.8bn, the prospect of getting over 50% of that back over the medium term looks attractive to me. But the latest update was quiet on this. 

Also in its report, Vistry stated its intention to return £130m to investors through share buybacks. That’s part of the story, but it’s not all of it and this is an important part of why the stock is attractive to me. 

I’m waiting

Like the other major UK housebuilders, Vistry is being investigated by the Competition and Markets Authority. That makes the stock risky, but I think a £1bn capital return might be enough to offset this.

As a result, I’ll be looking carefully for details about this when the company’s full results come out in March. The latest update looks very encouraging, but I’m just waiting for the last piece of the jigsaw before I decide whether or not to buy.