Greggs' share price has dropped significantly, trading below £18, a stark contrast to its position above £31 months ago.
Revenue exceeded £2bn, and pre-tax profit rose by 8.4% to £204m last year.
Like-for-like sales growth has slowed to 1.7% in the first nine weeks of 2025, partly attributed to challenging weather conditions.
The company warns of potential margin compression in 2026 and 2027 due to investments and rising labor costs.
Despite challenges, Greggs increased its full-year dividend by 11% to 69p per share.
The forward price-to-earnings (P/E) ratio has reduced, making the shares potentially cheap at 13 times forward earnings.
Why this matters: The slowdown in sales growth and warnings from the company are testing investor confidence.
Greggs' recent share price decline reflects concerns surrounding slowing like-for-like sales growth. While the company has ambitious expansion plans, aiming for over 3,000 UK outlets, analysts express concern regarding over-saturation. The forward P/E ratio of 18.4 and PEG ratio of 2.46 signal possible overvaluation. Although, another analyst argued the forward P/E ratio to be 13. Arguments point to possible continued supressed growth due to challenging economic factors, increased operating costs, and aggressive competition in the food-to-go market. However, Greggs' strong brand recognition, dividend payout, and potential for further growth if its store-count expansion plan succeeds create arguments for a potentially undervalued stock.
Q: Why has the Greggs share price fallen?
The share price has declined due to concerns about slowing sales growth, potential margin compression, and increased operating costs. Weather has also been cited.
Q: Is Greggs still a good investment?
Opinions are divided. Some analysts believe the stock is now cheap, citing its reduced P/E ratio and continued expansion plans. Others are more cautious, pointing to the slowing growth and potential overvaluation.
Q: What are Greggs' expansion plans?
Greggs aims to operate more than 3,000 UK outlets in the long term, with a target of 140 to 150 new stores in 2024.
Greggs' stock presents a mixed picture, with both potential risks and rewards.
Investors should carefully consider the company's slowing growth, margin pressures, and expansion plans.
The current low share price may be attractive to some, but further declines are possible if growth doesn't rebound.
Keep an eye on sales data and company announcements for clues about future performance.
Do you think Greggs shares are a bargain at their current price? Let us know! Share this with others who need to stay ahead of this trend!
Near a 52-week low, is the Greggs share price now an unmissable bargain?: [https://www.fool.co.uk/2025/03/22/near-a-52-week-low-is-the-greggs-share-price-now-an-unmissable-bargain/?ref=yanuki.com]
Greggs shares are down 37% in a year. Time to buy?: [https://www.fool.co.uk/investing-articles/greggs-shares-are-down-37-in-a-year-time-to-buy/?ref=yanuki.com]
3 reasons to avoid Greggs shares in 2025: [https://uk.finance.yahoo.com/news/3-reasons-avoid-greggs-shares-030145563.html?ref=yanuki.com]
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