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Its outlets are a well-known sight on Britain’s excessive streets and legions of individuals tuck into its snacks every day. However does Greggs (LSE: GRG) cross the tastiness check relating to potential traders too? Since I purchased Greggs shares a number of months in the past, they’ve roughly gone sideways. So, what may the long term appear like?
2025 has been painful for Greggs
To start out with, contemplate the efficiency of the baker to date this yr.
Regardless of its personal strategy to candy yum yums and the like, there isn’t a solution to sugarcoat this. Greggs shares have been a catastrophe so far in 2025. Particularly, they’ve misplaced 35% in worth. £10K invested at first of January would now be price £6,500. Ouch.
Sure, the three.7% dividend yield appears fairly tasty. However that hardly scratches the floor relating to mitigating that depressing efficiency.
Nonetheless, previous efficiency just isn’t essentially an indicator of what could occur in future. One good thing about the falling worth of Greggs shares has been that they now commerce for round 12 occasions earnings. That appears low cost to me and explains why I purchased Greggs shares this yr.
A short lived blip, or longer-term downside?
Nonetheless, that kind of fall doesn’t occur with out motive. And the share worth has proven little signal of kicking again into life at any level currently.
So, what’s going on?
I feel the Metropolis has been alarmed by the truth that Greggs is on the mistaken facet of many developments within the UK financial system. From weakening excessive road footfall, minimal wage staff and Nationwide Insurance coverage contributions to hovering espresso bean costs, Greggs is prone to take a success to its income this yr from all types of instructions.
However does that actually matter? In any case, prices can usually be handed on to clients within the type of increased retail costs. Greggs is already competitively priced, so pushing costs up a bit could not have too dangerous an influence on gross sales volumes.
In the meantime, the enterprise has proved repeatedly that it is aware of make what folks need, at scale and at a aggressive price.
This high-volume gross sales technique has seen the chain increase over the course of a long time. Not solely do I feel it will possibly construct on previous successes, I additionally reckon Greggs can use its present belongings to develop in areas it has beforehand largely ignored, corresponding to night meals.
I plan to carry
Primarily based on that, I reckon the shares proceed to look attractively priced.
The truth that they’re at present not recapturing a lot of the bottom misplaced this yr when it comes to share worth doesn’t hassle me.
As a long-term investor, my strategy is to purchase what I feel are attractively priced shares in nice corporations, then maintain on to them. Greggs strikes me as a wonderful enterprise with a confirmed mannequin.
So, I’m completely satisfied to take a seat again, let dividends roll in and wait whereas — hopefully — ongoing enterprise success finally pushes the share worth upwards.
