Finding genuine value stocks in a rising market is never easy. But sometimes, a perfectly good business gets caught in a storm of bad luck, leaving the shares trading well below where they should be. And right now, that might be the exact situation Greggs (LSE:GRG) has found itself in.
So could this be one of the most compelling recovery plays in the FTSE 250 today?
How did we get here?
In 2025, everything seemed to go wrong at once for Greggs. A brutal heatwave in the summer of 2025 sent footfall tumbling. Then snowstorms and red weather alerts in early 2026 forced around 250 Greggs locations to close. And sandwiched between these extremes was a consumer that, as management put it, seemed to prefer saving rather than spending.
The combined impact was significant. Full-year pre-tax profit fell 18% to £167.4m in 2025, and underlying operating profit margins compressed from 9.7% to 8.7%. And with cost inflation running at 5.6% and National Living Wage increases pushing up the wage bill, the squeeze came from both directions simultaneously.
The result? Greggs shares have gone from trading at around 3,000p in 2024 to around 1,600p today. It’s certainly been a painful loss for existing shareholders. But could we secretly be in the early innings of a rebound?
Green shoots are sprouting
Greggs’ latest trading update from May paints a meaningfully different picture compared to the doom and gloom of 2025. Like-for-like sales in the first 19 weeks of 2026 grew 2.5% year-on-year. That’s hardly groundbreaking but, crucially, the growth trend’s accelerating.
In the most recent 10 weeks, that figure improved to 3.3%, supported by new menu launches including the Chicken Roll, which has quickly become a bestseller.
Total sales hit £800m for the period, up 7.5% year-on-year. And the board confirmed its expectations for the full year remain unchanged.
Moreover, cost pressures are also easing. Like-for-like cost inflation’s expected to be around 3% in 2026, almost half the 5.6% rate seen in 2025. And management has locked in forward purchase agreements covering five months of food and packaging needs, plus 85% of its energy and fuel requirements.
In other words, leadership’s seemingly getting its cost base back under control.
So is Greggs a value stock worth buying?
The firm’s new facilities in Derby and Kettering are coming online in the second half of 2026 and into 2027. These investments are necessary for future growth, providing valuable food production capacity.
But both will weigh on margins in the near term. And if the Middle East conflict continues to escalate, management has explicitly warned that higher food cost inflation could return once its hedges start to mature.
With the average analyst price target sitting at 1,824p against today’s price of around 1,580p, the market’s pricing in only modest upside. But for patient investors who believe the consumer backdrop will continue to improve and that the cost cycle has genuinely turned, Greggs could be a value stock worth considering.
Should you invest £5,000 in Greggs Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs Plc made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
