Greggs‘ (LSE: GRG) share price was red-hot for years, but now it’s as cold as yesterday’s sausage rolls. So is this a good opportunity to buy shares in the FTSE 250 bakery chain at a discount?
The Greggs transformation was a wonder to behold. It was always thought to be a Newcastle thing, given its Northeast roots, but Greggs mania gripped the country. It’s last-brand-standing on many high streets these days, and increasingly pops up in retail centres and travel hubs too. There’s even one at Tenerife airport.
Can this FTSE 250 stock warm up again?
Greggs changed its image, expanded its range and extended its opening hours, while being quick to close underperforming outlets. Yet now the excitement has ebbed. Greggs is still posting decent underlying pre-tax operating profits, but the pace is slowing as the 2025 figure highlights:
- 2025 – £187.5m
- 2024 – £195.3m
- 2023 – £171.7m
- 2022 – £154.4m
- 2021 – £153.8m
In August 2024, Greggs’ shares peaked at 3,184p. Today, they trade at 1,575p, a crash of 50%, even though profits dipped just 4% in 2025. Why the huge discrepancy?
The stock had become expensive, with the price-to-earnings (P/E) ratio nudging 24. High valuations reflect high expectations. Too high, in this case. Greggs weathered the early stages of the cost-of-living crisis, by giving people a cheap treat in tough times.
But as money got tighter, even a trip to Greggs became a stretch for many. There’s the wider concern that Greggs has hit saturation point: Britons can only swallow so many steak bakes, surely. Plus I don’t think it’s the type of brand that can expand overseas. This is a very British company, selling very British products.
But there are reasons to be tempted today. The P/E ratio has fallen to just 13 and the forward dividend yield has climbed to a meaty 4.32%. That’s twice the income on offer than during the group’s imperial phase.
Has the bakery chain peaked?
Yet I’m worried. The Iran war may be nearing its end, which means inflation could ease, but it may be some time before people have money in their pockets again. Things are bleak out there. Greggs’ shares continued to slide, despite Middle East peace hopes, down 8.5% in the last week.
So what do the experts anticipate? Some 15 analyst offer one-year share price forecasts, and they produce a median target of 1,701p. If correct, that’s an increase of around 7.7% from today. Which would be pretty respectable.
Yet I’d think carefully before considering Greggs today. Its cult status and quirky marketing successes have lost their novelty. On a more practical level, the business also has to absorb extra costs, such as higher Employer’s National Insurance, and two big Minimum Wage hikes. And the UK’s struggling.
I can see more exciting recovery opportunities on the FTSE 100 and FTSE 250 today, and I’ll be exploring those instead.
Should you invest £5,000 in Greggs Plc right now?
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Harvey Jones does not hold any positions in the companies mentioned.
