Greggs (LSE: GRG) shares have been a giant winner lately, because the board pursued an formidable and profitable growth technique. 

The bakery chain has turn out to be a fixture on our excessive streets, in procuring centres, railway stations and even airports. As Britons search reasonably priced treats in powerful instances, Greggs has crammed its boots.

Then final autumn, development slowed as the broader economic system floor to a halt. Though gross sales are nonetheless rising, the tempo has slowed. The corporate set itself a excessive benchmark and has struggled to satisfy it.

Can this FTSE 250 inventory chunk again?

In full-year outcomes launched on 9 January, Greggs introduced that whole gross sales had handed £2bn for the primary time in 2024, rising 11.3% 12 months on 12 months. 

That ought to have been trigger for celebration however like-for-like (LFL) gross sales development in company-managed retailers had slowed to five.5%.

This autumn was weaker, with whole gross sales up 7.7%, however LFL gross sales development slipping to simply 2.5%, amid “more subdued high street footfall”. 

Chief govt Roisin Currie remained optimistic, citing a powerful pipeline of recent places and an increasing menu, however these are powerful instances if shoppers can’t afford a Greggs steak bake or sausage roll.

Even the climate has been towards it as hopes for a 2025 turnaround had been cooled by a disappointing buying and selling replace on 9 March. 

LFL gross sales in company-run retailers rose simply 1.7% within the first 9 weeks of the 12 months, with “challenging” January climate the wrongdoer this time. There was an indication of enchancment in February, and with spring on its means, buyers will hope that continues.

Whereas Greggs received’t be hit by Donald Trump’s commerce tariffs, it might take a knock from the resultant gloom. Plus inflation is anticipated to climb this summer season somewhat than fall. Greggs can even take a double price hit from rising employer’s Nationwide Insurance coverage and the 6.7% minimal wage hike, which each land in April.

The board is battling on, increasing its retailer footprint and increasing buying and selling hours, whereas investing in dwelling supply companies too.

I’ve been following the shares for some time, however thought expectations had been too excessive and the shares had been too expensive. That’s not the case in the present day.

Valuation down, dividend up

The Greggs share price has fallen 35% over the previous 12 months. Consequently, its price-to-earnings (P/E) ratio has dropped from over 22 instances to a far tastier 12 instances.

One other optimistic is the upper dividend yield, which has crept up to three.35%. I believe Greggs is value contemplating in the present day.

The 12 analysts providing one-year share price targets for the inventory have a median estimate of two,344p, suggesting a possible 26% rise from in the present day’s ranges. Mixed with the improved yield, this might ship a complete return of practically 30%. However I’ll add a notice of warning.

The sell-off might not be over but. Somebody who invested £10,000 a month in the past would have seen their stake shrink by 13.5%, leaving them with simply £8,650 in the present day. That’s a £1,350 paper loss.

Greggs has obtained my juices flowing however there’s a danger that the times of unstoppable development is perhaps over for now.