Picture supply: Getty Photographs
Supported by speedy enlargement, earnings at Greggs (LSE:GRG) have rocketed over the previous decade, which in flip has pushed its shares by means of the roof.
At £21.20 per share, Greggs’ shares are 154% costlier than they had been 10 years in the past.
However is the FTSE 250 baker nonetheless among the finest progress shares to contemplate shopping for immediately?
Development forecasts
From a short-term perspective, maybe not. Analysts anticipate annual earnings progress to halve this 12 months earlier than choosing as much as improved single-digit percentages in 2026:
| 12 months | Earnings per share | Earnings progress | Value-to-earnings (P/E) ratio |
|---|---|---|---|
| 2024 | 134.74p | 8% | 15.9 occasions |
| 2025 | 139.49p | 4% | 15.3 occasions |
| 2026 | 150.96p | 8% | 14.2 occasions |
There are many different mid-cap UK shares tipped to offer higher earnings progress over the following two years.
The anticipated progress drop for 2025 isn’t that shocking given current buying and selling. Brokers have been downgrading forecasts following information on 9 January that revenues rose ‘simply’ 7.7% within the ultimate quarter.
This was down from 10.6% in quarter three, and 13.8% within the first half.
Like-for-like gross sales, in the meantime, slowed to a crawl in quarter 4. They rose simply 2.5%, down sharply from 5% within the prior three months.
Fears rising
Buying and selling clearly hasn’t been catastrophic, although. Final 12 months, gross sales moved by means of the £2bn landmark for the primary time, with revenues rising even because the cost-of-living disaster dragged on. This isn’t the primary time Greggs has delivered progress regardless of powerful financial situations.
But it’s additionally attainable to know why the market’s been underwhelmed by current numbers. The corporate’s concentrate on low-cost meals retail means such resilience is already baked (no pun supposed) into traders’ expectations.
As a substitute, Greggs’ current gross sales numbers have ignited considerations over whether or not the agency’s progress methods — like higher night buying and selling, menu refreshments, and extra Click on and Accumulate — might be operating out of steam.
What subsequent?
Given the powerful financial outlook, I wouldn’t be shocked if Greggs gross sales disappoint a bit longer, placing recent stress on its share value.
However my view is that the baker’s progress outlook stays strong over the long term. It’s why I’ve taken benefit of current value weak point to purchase extra of its shares for my very own portfolio.
New retailer openings have been the bedrock of Greggs’ hovering earnings in recent times. And encouragingly, it sees additional scope for extra vital enlargement.
The agency’s added round 1,000 shops to its nationwide community for the reason that mid-2010s. It plans to chop the ribbon on one other 800, taking the entire to three,500. What’s extra, the baker plans to ramp up retailer openings in profitable journey locations reminiscent of airports and rail stations.
Additional enlargement shall be supported by funding in new distribution and manufacturing websites. Final 12 months, it introduced new amenities in Derby and Kettering, scheduled to open in 2026 and 2027, respectively. There’s execution danger right here, however Greggs’ robust report on this entrance ought to assist soothe traders’ fears.
I’m additionally assured that Greggs’ enhanced supply and digital companies and longer retailer opening hours will assist mild a fireplace beneath long-term earnings progress.
Because of this, I nonetheless suppose Greggs stays a prime progress share for traders to contemplate shopping for, regardless of the corporate’s present troubles.
