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There aren’t many value stocks on the FTSE that combine a sustainable 9.5% dividend yield, a price-to-earnings ratio of less than 15, and a share price that sits 25% below where it was 12 months ago. But right now, I’m looking at exactly that situation with Victrex (LSE:VCT).
So is this a screaming buying opportunity? Or a classic value trap that investors should avoid?
What exactly does Victrex do?
Victrex is the world’s leading manufacturer of PEEK polymers – a high-performance thermoplastic used in a wide range of applications including aerospace, automotive, medical devices, electronics, and industrial engineering.
And as one of the world’s leading pioneers of this niche and dynamic, Victrex has historically commanded strong pricing power that, until 2021, will deliver outstanding shareholder returns.
So what went wrong?
Why is Victrex in the dog house?
There are two main catalysts behind Victrex’s recent fall:
- Pandemic-driven supply chain disruptions have led to overstocking by customers, leading to global warming.
- High interest rates weigh heavily on almost all of Victrex’s target markets.
The impact of this is clear when we look at the team’s recent results. Underlying pre-tax profits fell 21% in 2025 after a combination of less profitable product and currency headwinds. Meanwhile, it recently completed a manufacturing facility in China, which was supposed to be a new growth engine, but has so far proven to be a headache.
In 2026, this weak performance appeared to have continued with both volumes and revenue falling by mid-single digits in the first quarter. And it seems that its long-term ‘big plans’ are also being quietly scaled back to reduce near-term costs.
So far, continued operational sustainability and financial recovery seem difficult. And 2026 looks set to be another year of change. But as we look to 2027, some promising signs seem to be emerging.
Is there a bull case?
Despite the gloom, there are real reasons for hope. Even with a hefty 9.5% yield, management has kept the dividend at 59.56p per share – reflecting strong confidence in the long-term outlook.
Meanwhile, new CEO James Routh is driving a broader operational overhaul “commercial, cost and efficiency”, which may begin to soundly raise wages from depressed levels. And this positive effect may be further enhanced by the wide availability of the PEEK demand cycle in all its markets.
That said, maintaining a dividend of around 60p is a risky move considering that earnings per share came in at just 43.9p, putting the payout ratio at a shockingly high 135.7%.
In the short term, that’s not really a disaster. But if the expected market recovery of the management does not happen in time, the shareholders will not only lose the dividends, but also see the balance sheet very weak.
So what is the verdict?
Victrex’s long-term opportunity remains really big. The company estimates that its total addressable market could be five times larger than current revenue, and forecast demand for PEEK will grow exponentially over the next decade.
Personally, I want to see more recovery progress before considering this value stock for my portfolio. But seeing such a growth opportunity trading at just 14.4 times underlying earnings is rare. So for contrarian investors who are willing to be patient, a closer look might not be a bad idea.
