Do Greggs shares have even more growth ahead?

Greggs shares have seen some solid growth in the last few months, as the economy shows positive signs. But is there more ahead?

| More on:
A graph made of neon tubes in a room

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Beloved UK bakery chain Greggs (LSE: GRG) has been on a remarkable journey over the past few years. From its humble beginnings as a local bakery in Newcastle, the company has transformed into a nationwide sensation, winning over customers with its affordable, freshly baked goods and savoury snacks. But as Greggs shares continues to rise, many investors are wondering: is there even more growth ahead?


Shares are currently trading at a significant discount to their estimated fair value, according to a discounted cash flow (DCF) calculation. With the current price of £28.40 a staggering 72% below this value, the market may still be underestimating the long-term potential here. Obviously this is just one metric, but it definitely gets me interested.

Even as the share price has rallied 16% in the last six months, this potential undervaluation could be an attractive entry point for new investors. With a focus on convenience, affordability, and quality that has resonated with consumers across the country, particularly in a challenging economic environment, I expect this company to be a firm fixture on the high street for the foreseeable.

Impressive performance

Similar to the share price, the firm’s financial performance has been impressive of late. In the trailing 12-month (TTM) period, the company reported earnings of £142.5m, representing an 18.5% increase. This growth is a testament to the efficiency and enduring appeal of its products in the UK.

Even more impressively, the company boasts a robust gross margin of 60.74% and a respectable net profit margin of 7.87%. These healthy margins suggest that the company can effectively manage costs and maintain pricing power, even in the face of recent inflationary pressures.

On the financial health front, Greggs shines. The company has no debt on its balance sheet, a rare feat in today’s business environment. This debt-free status not only allows tremendous flexibility for the company, but also reduces its exposure to rising interest rates and economic downturns.

The market also seems fairly optimistic about future growth prospects, with earnings forecast to grow by 5.66% per year for the next five years. This projected growth rate, while not astronomical, reflects the potential for consistent, long-term expansion.


While Greggs’ prospects appear promising, it’s not all rosy. There has been a significant amount of insider selling over the past three months, which could be a cause for concern. Insider selling can sometimes signal a lack of confidence in the company’s future prospects or an attempt to cash in on recent gains.

Additionally, the business operates in a highly competitive and saturated market, with rivals constantly vying for market share. Maintaining its competitive edge and defending its loyal customer base will be crucial for continued success.


Taking a step back, the journey this business has been on has been nothing short of remarkable, and the performance of Greggs shares clearly reflects that.

However, when I see management selling shares, I get very nervous. With all the knowledge of how the company operates, and what is around the corner, I place a lot of importance on what management is doing. I suspect that as the company continues to expand its footprint, the potential for further growth could be substantial, but I’ll be waiting for the right opportunity. I’ll be adding it to my watchlist for now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Gordon Best has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 of the best US growth and dividend stocks to consider!

These heavyweight US stocks have been delivering tasty investor returns for decades. Here's why they could remain great picks for…

Read more »

Investing Articles

I reckon these 2 penny shares are hidden gems worth a closer look!

Some penny shares are well-known, whereas many others go under the radar, but that doesn’t necessarily mean they aren’t potentially…

Read more »

Investing Articles

Just released: our 3 best dividend-focused stocks to buy before August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

2 FTSE 100 shares with blockbuster yields investors should consider buying

Our writer has noticed that these FTSE 100 shares offer mammoth dividend yields, and reckons investors should take a closer…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Down 36% and yielding 7.8%, is this FTSE 250 share a bargain?

Christopher Ruane looks at a FTSE 250 share with a sizeable dividend yield and a recent record of dividend growth.…

Read more »

Investing Articles

Is Barclays one of the FTSE 100’s best bargain stocks?

Right now, Barclays' shares are cheaper than those of FTSE 100 rival stocks Lloyds and NatWest. So should I buy…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

Here’s my Rolls-Royce dividend forecast for 2024-27!

Our writer considers whether the Rolls-Royce dividend might be reinstated in coming years, based on financial performance and stated payout…

Read more »