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Its retailers are a well-recognized sight on Britain’s excessive streets and legions of individuals tuck into its snacks every day. However does Greggs (LSE: GRG) go the tastiness check in the case of potential buyers too? Since I purchased Greggs shares a number of months in the past, they’ve kind of gone sideways. So, what may the long run appear like?
2025 has been painful for Greggs
To begin with, contemplate the efficiency of the baker thus far this yr.
Regardless of its personal method to candy yum yums and the like, there is no such thing as a strategy to sugarcoat this. Greggs shares have been a catastrophe to this point in 2025. Particularly, they’ve misplaced 35% in worth. £10K invested firstly of January would now be value £6,500. Ouch.
Sure, the three.7% dividend yield seems to be fairly tasty. However that hardly scratches the floor in the case of mitigating that depressing efficiency.
Nonetheless, previous efficiency 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 instances 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 type 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 believe the Metropolis has been alarmed by the truth that Greggs is on the mistaken aspect of many developments within the UK financial system. From weakening excessive avenue footfall, minimal wage staff and Nationwide Insurance coverage contributions to hovering espresso bean costs, Greggs is more likely to take successful to its earnings this yr from all types of instructions.
However does that actually matter? In spite of everything, prices can usually be handed on to clients within the type of greater retail costs. Greggs is already competitively priced, so pushing costs up a bit could not have too dangerous an affect on gross sales volumes.
In the meantime, the enterprise has proved again and again that it is aware of easy methods to make what folks need, at scale and at a aggressive value.
This high-volume gross sales technique has seen the chain develop over the course of a long time. Not solely do I believe it may construct on previous successes, I additionally reckon Greggs can use its present belongings to develop in areas it has beforehand largely ignored, akin 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 the moment 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 method is to purchase what I believe 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 joyful to take a seat again, let dividends roll in and wait whereas — hopefully — ongoing enterprise success ultimately pushes the share worth upwards.
