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The Greggs (LSE: GRG) share worth was already in bother earlier than the Iran conflict despatched buyers right into a panic. After an excellent run, when the FTSE 250 bakery chain might do no flawed, its gross sales, income and share efficiency all began to chill in late 2024.
Center East worries tensions to make a nasty scenario worse by driving up inflation and leaving customers feeling even poorer. Traders who anticipated Greggs’ shares to take a beating could also be in for a shock although. They’re really up 5.8% during the last week. Solely six FTSE 250 shares did higher. What’s taking place?
FTSE 250 blended bag
Chief govt Roisin Currie hailed a “resilient” efficiency, pointing to rising market share and continued strategic progress. Which will clarify why the shares have held up. But these weren’t precisely stellar outcomes.
Underlying pre-tax revenue fell 9.4% to £172m, hit by quantity stress and rising fastened prices tied to manufacturing, logistics and expertise capability.
Greggs was additionally pretty downbeat concerning the outlook. It expects market circumstances to “remain challenging” this 12 months. I don’t suppose anyone would dispute that proper now.
Greggs insists its robust worth proposition ought to assist gross sales, however the brand new monetary 12 months regarded sluggish, even earlier than Iran. In these straitened instances even a cheeky journey to Greggs is beginning to really feel like a luxurious for a lot of.
The group captured the general public temper brilliantly for years, however Dan Coatsworth, head of markets at AJ Bell, has highlighted a “nagging feeling its proposition is becoming stale”, regardless of the corporate continuously refreshing its menu.
Development, worth and earnings
I see his level. I’m not a pure Greggs buyer however I’ve popped in for the odd sausage roll or steak bake over time. These days although, I haven’t a lot fancied it. Greggs admits dietary preferences are shifting. Customers are more and more on the lookout for extra protein, extra fibre and smaller parts. The rising recognition of weight-loss medication might additionally have an effect.
After I final checked out Greggs‘ shares on 1 March, the price-to-earnings ratio looked seriously tempting at 10.5. That was less than half the level seen during the boom years. Nine days later, it’s climbed to round 13.85.
The shift most likely displays weaker earnings in addition to the current bounce within the share worth. It’s first rate worth immediately, however not dust low cost. The trailing dividend yield has dipped barely to about 4.2%, though that also appears fairly interesting for earnings seekers.
Even so, I’m not massively excited by these outcomes, and marvel if Greggs’ second has handed. Die-hard followers may think about shopping for its shares immediately, however I can see loads of FTSE 100 and FTSE 250 shares that look extra tempting within the present volatility.
