Greggs shares have slumped 21% in 2025. Time to consider buying?

The famed sausage roll maker’s share price has had the stuffing knocked out of it in recent weeks. Should our writer now get greedy for Greggs shares?

| 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.

It has not been a good year so far for Greggs (LSE: GRG). Greggs shares have crashed  21% this year. Yes, this year. Less than three weeks into 2025, the baker has had over a fifth wiped off its share price.

But as a long-term investor, I have had my eyes on the sausage roll supplier. So could this share price tumble represent a buying opportunity for my portfolio?

Concerns about future customer demand

What explains that fall? This month, the FTSE 250 business updated the market on its performance last year. Total sales grew 11% year-on-year. The fourth quarter saw sales growth slow, but it still came in at a pretty impressive 8%.

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

The company opened a record number of new shops, it expects strong ongoing opening momentum and the year should come in line with the board’s expectations.

All of that raised the question, why the price crash? After all, that news sounds upbeat.

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

One clue was a decline in net cash from £195m to £125m. Still, fitting out new shops – as well as planning a new distribution centre – eats up cash. But as a long-term investor I see that as potentially positive for the business.

But the bigger concern, in my opinion, was Greggs’ take on what might happen next. It pointed to lower consumer confidence as a key risk to expenditure. That, it seems, has given the market fright.

Lots to like about the long-term outlook

I think that is a valid concern. The company said it had carefully managed costs in the fourth quarter, so while it ought to be able to meet expectations for 2024 performance, I see a risk that higher costs could be more problematic for profits at the full-year level in 2025.

But Greggs has been here before, many times. It has honed its business model through recessions, weak consumer spending, shop shutdowns and more. I have confidence that management will continue to move it forward positively.

Greggs has a unique brand and has done a good job developing strong products in what many thought was basically a commodified space. Its large shop estate gives it economies of scale and it has also been harnessing digital technology to help drive sales (although in my case I find its screen-based pricing displays a step backwards from when I could just look at a product and see a price tag beside it).

Not yet a bargain, but may be heading there

Still, Greggs trades on a price-to-earnings ratio of 17. So even with those strengths, I would not describe it as a bargain especially taking into account the potential for a profit squeeze this year, due to weaker consumer spending and also higher costs via higher employment costs.

But Greggs shares are 7% cheaper than they were five years ago. The business is now bigger and, in my opinion, more battle-tested than it was then.

At this price, I am still not ready to buy. But I am keeping a close eye to see whether further share price falls could make this seem like an attractive long-term buying opportunity.

Should you buy Greggs Plc shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy 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.

C Ruane 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »