I’ve been eyeing shares in baker Greggs (LSE: GRG) for some time. After an enormous fall within the Greggs share price this week following the corporate’s outcomes, I made a decision to make a transfer and purchase.

Why I just like the funding case

To begin with, let me clarify what attracts me to the corporate.

It operates in an space with excessive, resilient client demand. Folks at all times have to eat and Greggs is an inexpensive, handy choice for a lot of. 

Because the enterprise has grown, it has constructed economies of scale. For instance, centralised manufacturing vegetation imply that a lot of the meals prepping might be carried out in bulk at extra environment friendly, lower-cost areas than the chain’s excessive road websites.

The enterprise has been fairly revolutionary in relation to product launches. It now has an providing that features some distinctive objects. I see that as giving it a aggressive benefit over rivals.

The outcomes have been good – or have been they?

Trying on the double-digit share fall within the Greggs share price following the discharge of annual outcomes, it will appear that they have been poor. Many commentators appeared unimpressed with the efficiency.

Personally, although, I noticed tons to love.

Gross sales revenues grew 11%, pre-tax revenue was up 8%, and diluted earnings per share have been 8% larger than a yr earlier than. The annual atypical dividend per share was elevated by 11%, that means that the FTSE 250 share now provides a dividend yield of three.9%.

Gross sales in company-managed shops grew extra slowly than gross sales total (among the gross sales progress got here from opening new outlets) and this yr has began with solely modest gross sales progress.

On steadiness, although, I didn’t assume that the outcomes undermined the funding case.

Ready for worth, then pouncing

The present Greggs share price-to-earnings ratio is 12.  

That’s decrease than it has been for some time and in my opinion seems like good worth.

Positive, there are dangers that assist clarify why the Greggs share price has been falling. Its money pile fell final yr. Pricey capital expenditure necessities may proceed to eat into it, because the chain retains increasing its operations.

However once I have a look at the corporate I see a solidly profitably, money generative enterprise with a confirmed mannequin and ongoing progress prospects.

I’ve been ready some time for the share price to get to a stage that I believe provides a pretty shopping for alternative. Now it has.

Like billionaire investor Warren Buffett, my inventory market method is to purchase stakes in what I believe are nice companies at engaging costs, with a view to holding them for the long run.

A tumbling Greggs share price has given me a chance to do exactly that – and I’ve seized it.