Is the Greggs share price now a screaming buy for me after falling 10% this month?

Harvey Jones watched the Greggs share price climb and climb, but decided it was too expensive for him. Should he buy the FTSE 250 stock now it’s fallen?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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.

I’ve been watching the Greggs (LSE: GRG) share price for months, wondering whether this was a good time to buy it.

Britain’s favourite bakery chain has turned itself into a national treasure, supplying traditional fayre like sausage rolls and steak bakes, without feeling stodgy or old-fashioned itself. Unlike so many retailers, the cost-of-living crisis did it a favour, as cash-strapped shoppers saw a trip to Greggs as an affordable treat.

Greggs has been marketed brilliantly, from its clothing range (with Primark) to its legendary vegan sausage rolls. I’m not sure how many it actually sold, but everybody was talking about them.

Should you invest £1,000 in Greggs Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs Plc made the list?

See the 6 stocks

FTSE 250 growth star

Management’s aiming to lift total store numbers from 2,500 to 3,500 and is looking beyond the high street to stations, airports, supermarkets and retail parks. It’s also testing evening openings.

At the same time, it’s swift to close underperforming outlets, which keeps margins high. Given that I’m such a fan, why didn’t I sink my teeth into its shares?

One of the first metrics I look at when deciding whether to buy a stock is the price-to-earnings ratio, and that was always high at more than 20 times. The price-to-sales ratio, which compares a company’s share price to its revenues, was also pricey, on the high side at 1.6, but not dangerously so.

Especially since sales have been growing fast, jumping almost 20%, from £1.513m in 2022 to £1.810m in 2023.

The board’s been willing to reward loyal shareholders too. A trailing dividend yield of 2.15% is modest but management’s progressive. It hiked the dividend by 3.5% to 59p in 2022 and then by 5% to 62p in 2023.

The Greggs share price has climbed 20.32% over 12 months and 62.84% over five years, and I felt it I was coming to the party too late.

Created with Highcharts 11.4.3Greggs Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Given all the excitement, it was vulnerable to shocks, and it got one on 1 October when it announced Q3 sales had slowed. The share price has plunged from 3,214p to 2,884p today, a drop of 10.26%.

Growth and dividend income

The slowdown was hardly a calamity. Managed like-for-like sales rose 5% but that followed 7.4% growth in the first half. High expectations were still confounded.

Greggs is still growing and still innovating, with an All-Day Breakfast Baguette, Mexican Bean & Spicy Cheese Flatbread and Pumpkin Spice Doughnuts the latest additions to its range.

But I still can’t bring myself to buy its shares at today’s lower price. There’s still a lot of growth priced into today’s valuation of 22.93 times earnings and there are risks. Can it maintain its cult status, or will it succumb to healthier eating trends (if they ever truly arrive)?

Brokers are more optimistic. The 11 analysts offering one-year price forecasts have set a median target of 3,332p, up 15.7% from today. There’s a wide range of views, though, with a maximum estimate of 4,040p and a minimum of 2,600p.

However, I won’t be taking advantage of today’s dip. It’s still pricey and I’m worried we’ve passed peak Greggs.

Should you buy Greggs Plc now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation 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.

Harvey Jones 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

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Around a 1-year high, is there enough value left in Next’s share price to make it worth me buying?

Next’s share price has risen a lot in eight months, but there could still be a lot of value left…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

OMG DYOR but IMO this ‘cool’ FTSE 100 stock offers bangin’ VFM!

Despite being one of the least trendy 50-somethings around, our writer considers how Gen Z could help push this FTSE…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 growth stocks to consider as stock markets sink

I think these Footsie and FTSE 250 growth shares could be very shrewd buys to consider in the current climate.…

Read more »

Investing Articles

3 shares I’ve bought in the 2025 stock market sell-off

The stock market has experienced a lot of turbulence in recent weeks. Edward Sheldon has been taking advantage and buying…

Read more »

Investing Articles

Investors considering HSBC shares could aim for £8,453 a year in passive income from just £5 a day!

A relatively small daily investment in HSBC shares over several years can produce an extraordinary level of annual passive income…

Read more »

Investing Articles

The Rolls-Royce share price has fallen! Is this the moment investors have been waiting for?

Even the Rolls-Royce share price can't escape current stock market volatility, falling slightly over the last week. Should investors consider…

Read more »

Modern suburban family houses with car on driveway
Investing Articles

Down 59% from its 12-month highs, is this FTSE 250 stock too cheap to ignore?

Shares in FTSE 250 housebuilder Vistry are almost certainly too cheap to ignore. But are they discounted enough to offset…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

The S&P 500 is fighting to regain its February highs amid ongoing trade tariff uncertainty. Our writer looks to the…

Read more »