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After dropping roughly 40% of their worth in 2025, it’s truthful to ask whether or not Greggs (LSE:GRG) share can lastly stage a significant restoration subsequent yr. Personally, I’m sceptical.
For a lot of the previous decade, Greggs was handled as a progress inventory. Revenues compounded at double-digit charges, earnings climbed steadily, and the shop property expanded quickly throughout the UK.
However the numbers now counsel a enterprise that’s maturing. Income progress has slowed and earnings momentum has pale (and even gone into reverse). Normalised earnings per share are anticipated to have fallen in 2025 earlier than recovering barely in 2026 — hardly the profile of a high-growth firm.
Destined to sluggish
In some ways, this shift was inevitable. That’s definitely my view.
Greggs is already ubiquitous within the UK, with 1000’s of places and restricted white area left to use. That makes incremental progress more durable.
Worldwide enlargement has been tried earlier than, and it didn’t work. Greggs is basically a home enterprise with pure limits as a result of steak bakes gained’t work on the continent.
What’s extra, it’s a enterprise that has all the time been constrained by the corporate’s value-led providing. It merely can’t push costs up considerably above prices as a result of that’s not what the shopper base expects.
There’s additionally a broader structural subject. Shopper tendencies proceed to shift in the direction of more healthy consuming, and whereas Greggs has tailored with salads, vegan strains and breakfast choices, these won’t ever completely align with a baked-goods-led enterprise mannequin.
In spite of everything, that is Greggs the Bakers — not Greggs the salad makers.
On the optimistic aspect, it’s definitely a model everybody is aware of and lots of people like. And that counts for one thing, significantly with small retail traders who may wish to put money into a enterprise they know and patronise.
Is the inventory good worth?
The market more and more views the shares as an revenue play. The dividend yield has grown strongly in recent times as a result of the share worth has flopped — the dividend yield now sits above 4%.
That’s respectable yield, however it additionally marks a transparent change in character. Greggs has quietly transitioned from a progress inventory right into a dividend inventory.
The issue is that neither angle is very compelling. For me no less than.
The value-to-earnings ratio (P/E) of 13.5 instances now not appears to be like low cost when set in opposition to low single-digit earnings progress, whereas the dividend, although dependable, isn’t beneficiant sufficient to face out. Buyers can obtain related yields immediately from authorities bonds, with out taking up fairness threat.
The underside line
For me, 2026 doesn’t appear like the yr Greggs rediscovers its former momentum.
I really consider Greggs is a superb instance of retail traders investing in firms they know, quite than a enterprise they’ve actually researched and perceive. Inside that, inventory momentum is self-propelling as traders are drawn to the rising share worth, however sadly the corporate’s personal momentum couldn’t go on ceaselessly.
It’s firm, however nonetheless trades at ranges I’m not going to entertain. It’s definitely cheaper than it was 18 months in the past — when it peaked — however not sufficient to curiosity me.
Personally, I don’t consider it’s value contemplating in 2026.
