I’ve been watching the Greggs (LSE: GRG) share price for months, questioning whether or not this was a superb time to purchase it.

Britain’s favorite bakery chain has turned itself right into a nationwide treasure, supplying conventional fayre like sausage rolls and steak bakes, with out feeling stodgy or old school itself. Not like so many retailers, the cost-of-living disaster did it a favour, as cash-strapped customers noticed a visit to Greggs as an reasonably priced deal with.

Greggs has been marketed brilliantly, from its clothes vary (with Primark) to its legendary vegan sausage rolls. I’m unsure what number of it truly bought, however everyone was speaking about them.

FTSE 250 progress star

Administration’s aiming to carry complete retailer numbers from 2,500 to three,500 and is trying past the excessive road to stations, airports, supermarkets and retail parks. It’s additionally testing night openings.

On the identical time, it’s swift to shut underperforming shops, which retains margins excessive. Provided that I’m such a fan, why didn’t I sink my tooth into its shares?

One of many first metrics I have a look at when deciding whether or not to purchase a inventory is the price-to-earnings ratio, and that was all the time excessive at greater than 20 instances. The price-to-sales ratio, which compares an organization’s share price to its revenues, was additionally expensive, on the excessive facet at 1.6, however not dangerously so.

Particularly since gross sales have been rising quick, leaping nearly 20%, from £1.513m in 2022 to £1.810m in 2023.

The board’s been prepared to reward loyal shareholders too. A trailing dividend yield of two.15% is modest however administration’s progressive. It hiked the dividend by 3.5% to 59p in 2022 after which by 5% to 62p in 2023.

The Greggs share price has climbed 20.32% over 12 months and 62.84% over 5 years, and I felt it I used to be coming to the social gathering too late.

Given all the joy, it was susceptible to shocks, and it received one on 1 October when it introduced Q3 gross sales had slowed. The share price has plunged from 3,214p to 2,884p at the moment, a drop of 10.26%.

Development and dividend revenue

The slowdown was hardly a calamity. Managed like-for-like gross sales rose 5% however that adopted 7.4% progress within the first half. Excessive expectations have been nonetheless confounded.

Greggs continues to be rising and nonetheless innovating, with an All-Day Breakfast Baguette, Mexican Bean & Spicy Cheese Flatbread and Pumpkin Spice Doughnuts the most recent additions to its vary.

However I nonetheless can’t deliver myself to purchase its shares at at the moment’s decrease price. There’s nonetheless a whole lot of progress priced into at the moment’s valuation of twenty-two.93 instances earnings and there are dangers. Can it keep its cult standing, or will it succumb to more healthy consuming tendencies (in the event that they ever really arrive)?

Brokers are extra optimistic. The 11 analysts providing one-year price forecasts have set a median goal of three,332p, up 15.7% from at the moment. There’s a variety of views, although, with a most estimate of 4,040p and a minimal of two,600p.

Nonetheless, I received’t be benefiting from at the moment’s dip. It’s nonetheless expensive and I’m apprehensive we’ve handed peak Greggs.