Down 35% on the day, could Vistry Group's price be the buying opportunity of the decade?

I The Vistry Group (LSE:VTY) share price fell 35% in early trading on Tuesday (8 October). News of a cost error means the stock is falling, let's take another FTSE 100 home builders too.

There are many risks for shareholders to consider – and this goes beyond the latest news. But as I see it, I wonder if this could be one of the best buying opportunities of the decade.

Fear and greed

Vistry's South Division accounted for the cost of nine of its 46 developments. The error is about 10% of the total cost of construction and will balance the benefits until the end of 2026.

According to the company, that will mean pre-tax profits will be lower than expected by £80m this year, £30m in 2025, and £5m in 2026. And that's a lot for a company Vistry's size.

As a result, it's probably no surprise that the stock is falling. But the administration also made the following announcement, which caught my attention:

'Despite the one adjustment announced today, we remain committed to… our medium-term target of £800m of adjusted operating profit and £1bn of capital distributions to shareholders.'

As the stock has fallen, the company's market value is around £3bn. If Vistry can distribute £1bn over the next few years through dividends and share buybacks, that's a 33% return.

That would make the current share price a once-in-a-decade opportunity. But there are real risks that shareholders should consider.

Risks and rewards

As I see it, there are two major risks to consider with Vistry shares. The first is that there may be unexpected additional costs yet to come.

The company believes that the mistakes are complete in its Southern division and is making changes to the management team. But it would be reckless for investors to be completely convinced of this.

Another issue is that Vistry – like many UK housebuilders – is being investigated by the Competition and Markets Authority. The concern is over potential anti-competitive behavior.

It is difficult for investors to accurately quantify that risk. Predicting what the outcome of that investigation will be is very difficult and that adds to the uncertainty of the future.

If these two issues go away though, there's a lot to like about Vistry. The business has done well by designing the area in collaboration with local authorities to build rental housing.

That means the company has enjoyed strong demand, even as high interest rates have weighed on consumer borrowing. So beyond the dangers, there's a lot to like here.

What should investors do?

As I see it, Vistry is really hard right now. The risks are very high, but if the company is really going to return £1bn to shareholders, the current share price is a bargain.

I will not be willing to make this a large position in my portfolio. But as part of a diversified investment group, I think there may be an opportunity to consider here.