The rise and fall of Greggs (LSE: GRG) shares has been one of the most captivating recent stories from the FTSE 250, at least in my opinion. The much-loved brand saw its value roughly halve between September 2024 and September 2025.
To make matters worse, the price has gone pretty much nowhere since. Anyone taking a stake at the beginning of 2026 and checking their portfolio for the first time today won’t have missed a thing.
Why is this so-called ‘bargain stock’ struggling to get its mojo back?
Multiple headwinds
One factor that may be keeping buyers away is the number of short sellers circling the ‘food on the go’ retailer. As I type, Greggs is the fourth most ‘popular’ firm in the entire market, at least on this measure. Put another way, a significant minority of traders are actively betting that the share price will remain under pressure.
Why might they be proved right? Well, the worries that caused the share price to collapse are still very much here. When just paying the bills is hard enough, consumer demand in general will be impacted and high streets will see lower footfall. Factor in higher business costs (and even the effect of weight-loss drugs) and the baker’s lack of positive momentum starts to make a bit more sense.
Things could get worse too, especially if management’s plan to continue opening new stores backfires and Greggs begins to cannibalise its own sales.
And then there’s the weather. Another heat wave would be far from ideal. After all, who wants to munch on a boiling hot pasty when they’re already struggling to stay cool?
Based on all this, Greggs shares might not be undervalued at all.
It’s not all doom and gloom
Then again, one could also argue that at least a proportion of these headwinds are temporary. A boiling hot summer — if we actually get one — will ultimately be replaced by a chilly winter. As tough as the cost-of-living crisis is for all retailers, I’d also much rather be owning one that was focused on offering value over luxury.
The suggestion that we’re already at ‘peak Greggs’ can also be contested. Far from just occupying units on the high street, it’s been tapping into new growth opportunities and expanding into travel locations, such as airports.
Even though debt has been rising, the firm’s finances don’t look unduly stressed either. Although they can never be guaranteed, this makes it likely that holders will continue to receive dividends. Right now, the yield stands at a very decent 4%.
My verdict on Greggs shares
Taking these points into account, the current price-to-earnings (P/E) ratio of 14 for 2026 might prove a steal eventually. But that last word was picked deliberately.
Half-year numbers from the Newcastle-based business are due at the end of July. Personally, I’m not expecting anything too special. May’s trading update did show a slight improvement in sales growth. But it seems that the market is looking for a lot more if it’s to get excited about Greggs again, especially as higher cost inflation in 2027 is anticipated if the Middle East conflict continues. And it doesn’t look like a peace deal is about to stick any time soon.
I’m still not quite ready to get involved here.
Should you invest £5,000 in Greggs Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs Plc made the list?
Paul Summers has no position in any of the shares mentioned.
