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It’s been a tough time to be a Greggs‘ (LSE:GRG) shares proprietor, with the inventory now buying and selling at its lowest degree in over 5 years.
Since August 2024, Britain’s favorite bakery chain has seen its market cap collapse by nearly 50% on the again of shrinking progress and rising prices. And the corporate is now some of the closely shorted shares on the London Inventory Alternate.
But, might that quickly be about to vary?
An incoming restoration?
Whereas earnings took a tumble on the again of margin stress, gross sales progress began to tick again up within the second half of 2025. And this momentum has spilt over into 2026, with administration reporting a a lot stronger begin to the 12 months in comparison with 12 months in the past.
On the identical time, the group’s capital expenditures are on monitor to drop from £287m to £200m this 12 months, earlier than falling additional to £150m-£170m in 2027. Meaning administration’s set to get pleasure from an additional £87m of free money movement this 12 months all of the whereas persevering with with its retailer growth ambitions of reaching 3,000 UK places.
What about revenue margins? In 2025, the working profitability shrank from 9.7% to eight.7%, principally attributable to a mixture of upper substances, workers, tax, and vitality prices. In 2026, these pressures proceed, but administration’s taking steps to offset the influence by way of each value hikes and inside effectivity efforts.
The mix of steadily enhancing gross sales, falling capex, and anticipated margin stabilisation all means that Greggs may very well be near the underside of its present cycle. And it’s a conclusion that the analysts at JP Morgan, Barclays, and UBS have additionally seemingly reached.
All three groups of specialists have simply reiterated their Purchase suggestions with 12-month share value targets ranging 1,910p-2,200p – a possible restoration acquire of as much as 35%!
What are the bears saying?
If Greggs does certainly proceed to ship superior ends in 2026, an unwinding of present quick positions might set off a powerful double-digit rally within the share value.
Nonetheless, returning income to progress, even with greater gross sales, isn’t going to be a straightforward feat within the present local weather. And even administration’s warned that any enchancment in earnings might be “contingent on a recovery in the consumer backdrop”.
That is additionally having an influence on gross sales. Income progress’s primarily being pushed by new places, with present shops solely producing modest like-for-like progress – a slowdown which hasn’t proven any vital indicators of restoration but.
So what ought to traders make of all this?
The underside line
From a valuation perspective, Greggs’ shares are fairly low-cost proper now, buying and selling at a big low cost in opposition to each historic and wider market ranges. Whether or not that presents a shopping for alternative finally relies on whether or not the corporate’s capable of proceed steadily ramping up gross sales and restore revenue margins.
There are some encouraging early indicators that this restoration is already underneath method. However all issues thought-about, I believe traders ought to wait to see extra progress earlier than fascinated about shopping for any Greggs’ shares right now, particularly since there are different UK shares that look way more promising proper now.
