It has been a tricky few years for FTSE 250 agency Victrex (LSE: VCT).

The polymers specialist has seen its share price fall by 27% in a single yr. Over 5 years, the decline has been 58%.

The factor is, I feel Victrex has lots to love about it as a enterprise.

If that turns into clearer once more this yr, allaying some Metropolis fears about dangers the enterprise faces, I feel the FTSE 250 share might advantage a better price.

To begin, I’ll clarify what I like about Victrex (and why I’m a shareholder in it).

A Warren Buffett-like moat

The principle purpose I like Victrex is that it has the type of enterprise “moat” billionaire Warren Buffett typically enthuses about.

It makes excessive efficiency polymers which might be utilized in all types of purposes the place security is essential, from aerospace to cars. That signifies that high quality is a paramount consideration for patrons, giving suppliers pricing energy.

On high of that, Victrex makes a lot of proprietary polymer merchandise that successfully imply it’s the solely selection for patrons with sure particular wants. Once more, that provides it pricing energy.

In flip, that has helped the corporate generate sizeable extra money to pay dividends. The present dividend yield is 5.8%.

An more and more robust buying and selling surroundings

To this point, so good.

For a very long time, that enterprise mannequin was akin to a license to print cash.

Victrex has had a tough few years which have known as into query whether or not it may possibly maintain its previous success (and revenue margins). Put up-tax revenue final yr was 77% decrease than two years earlier than. Revenues in the identical interval slid by 12%.

As industrial purposes evolve, a key threat going through Victrex – and it’s one I proceed to see – is whether or not demand for the kinds of polymers it makes will keep sturdy, or decline.

Indicators of a possible turnaround

So it’s comprehensible that traders had been cheered by some parts of the corporate’s full-year outcomes, revealed final month. Sure, revenues earlier than tax had been down and pre-tax revenue was down badly.

However there was, no less than, quantity development.

A few of the latest earnings drops will be pinned on the startup prices of recent manufacturing services in China. Now they’re operational, hopefully they will flip from a loss centre to a revenue centre for the FTSE 250 agency (although one threat I see is mental property leakage).

What concerning the quantity story?

Greater volumes however decrease revenues sometimes level to both a change within the mixture of merchandise offered, or declining pricing energy. The corporate pinned this on change charges and weaker efficiency in its greater margin medical division, affecting its general gross sales combine.

So, if the product combine will get again to a extra regular one (with stronger contribution from medical merchandise) and volumes proceed to develop, 2025 might see each revenues and earnings develop at Victrex.

If that occurs, I feel it may very well be excellent news for the Victrex share price. Having taken some earnings following final month’s announcement, I proceed to carry my long-term Victrex stake for now.