Greggs’ (LSE:GRG) shares have been a nightmare for investors who bought in five years ago. The FTSE 250 company’s collapsed 43% in value, as sales have crumbled like an old sausage roll.
It’s not that revenues have fallen off a cliff. Like-for-like sales in its owned stores rose 2.4% in 2025. Rather, the market believes Greggs’ share price no longer deserves the huge premium it once had.
The question is, are its shares now too cheap?
Down it goes…
Greggs’ shares have been volatile since mid-2021 as pressure on consumers’ spending power has hit sales. They fell sharply for most of 2022 as revenues weakened and rising manufacturing costs put further pressure on earnings.
They then rose between October 2022 and September 2024 as customer demand recovered, helped by measures like investment in the digital channel and menu refreshments. But amid a broader slump in the UK’s retail sector, not even value operators like Greggs have been spared the slowdown. Its shares tanked two autumns ago and have continued to struggle.
Last year, like-for-like sales growth from company-owned stores was less than half the 5.5% recorded in 2024. That itself was down significantly from the 13.7% recorded in 2023. Declining sales remains a risk for the company.
A value opportunity?
I didn’t buy Greggs’ shares five years ago. So I’ve not made the same sort of loss (on paper of otherwise) that some other investors have. But I’m still down 34% after I first invested in November 2024 and increased my stake three months later, taking into account dividends I’ve received.
I’m never too proud to acknowledge an investing mistake and sell up. I’ve shaken underperforming shares out of my portfolio before when the investment case has changed, booking a big loss. Even experienced investors like me don’t get it right every time.
The thing is, I buy stocks based on the returns I could potentially make over the long term. And I’m confident Greggs’ share price will rebound sharply from current levels. It’s why I continue to hold them in my Self-Invested Personal Pension (SIPP).
In fact, given how cheap Greggs’ shares are today, even a little bit of good news could see this happen sooner instead of later. Today, it trades on a forward price-to-earnings (P/E) ratio of 12.5 times. That’s miles below the 10-year average of 22-23.
Greggs shares: will they rebound?
So what could return the baker’s share price to pre-crash levels? These include:
- Steady sales improvement as the cost-of-living crisis eases.
- Further expansion into evening trading, the company’s fastest-growing daypart.
- Higher digital revenues as delivery partnerships grow and app usage rises.
- Improving profit margins, helped by new factories and distribution sites and falling cost inflation.
- A larger retail estate, with 3,000 stores targeted and focus on more lucrative travel destinations.
Given my existing holdings in Greggs, I’m not tempted to buy the baker’s shares just yet. But if they fall further in price I’ll seriously consider increasing my stake. I think it’s a top dip buy for long-term investors to consider.
Should you invest £5,000 in Greggs Plc right now?
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Royston Wild owns shares in Greggs.
