Greggs (LSE:GRG) has proved to be one of the FTSE 250‘s greatest growth shares in recent years. But investor interest in the sausage roll merchant has waned amid rising dangers to its long record of rising profits.
Earnings per share (EPS) growth has averaged 12% a year over the last 10 years. But as City forecasts below show, the bottom line looks set to underperform over the short term:
| Year | Predicted earnings per share | Annual growth | Price-to-earnings (P/E) ratio |
|---|---|---|---|
| 2025 | 135.26p | -10% | 16.1 times |
| 2026 | 139.59p | +3% | 15.6 times |
| 2027 | 150.25p | +8% | 14.5 times |
Importantly, the baker’s bottom line is tipped to rise again from 2026, though the predicted growth is still below that long-term average.
Right now there are two important questions that investors need to ask. How accurate are current broker estimates? And are Greggs shares a buy following their recent heavy price decline?
Trading troubles
Though it’s stabilised more recently, the former star baker has fallen sharply in value since the autumn. It’s not that trading has been awful: like-for-like sales in company-managed shops were up 2.9% in the first 20 weeks of 2025.
However, sales growth is down substantially from what investors have become accustomed to. Corresponding sales were up 7.4% in the first 19 weeks of last year.
Greggs’ worse performance reflects chiefly the ongoing cost-of-living crisis and its effect on consumer spending. Despite its focus on low-cost baked goods, this is providing little protection given tough conditions for its key customer base.
Discount retailer B&M is facing the same stresses. It warned this week (4 June) that limited wage growth is “especially [problematic] for our core lower-income consumer groups“.
On top of this, Greggs has faced intense competition as other food-to-go giants rapidly expand. Last month, KFC announced plans to open another 500 restaurants over the next five years, adding extra pressure.
Ready to rebound
Yet, Greggs has potentially lucrative expansion plans of its own. It’s raised the number of sites in its portfolio to 2,638 from 1,664 a decade ago. And it has plans to raise the total to 3,500, supported by new manufacturing and logistics facilities in The Midlands.
The baker is also ramping up evening trading and investing in delivery to take on its rivals. Given its strong record of execution, I’m optimistic these measures will continue to drive long-term growth.
These new store openings will also be focused in fast food hotspots such as airports, train stations, and retail parks. This is a shrewd option as the high street endures a steady decline.
Finally, Greggs’ flair menu innovation convinces me it can keep thriving in a competitive marketplace. In the last quarter, fresh additions to its over-ice drinks range flew off the shelves, while its pizza boxes and mac and cheese also experienced strong demand.
On balance, I’m optimistic the company can rebound from a troubled 2025, as City analysts expect. And I think this makes it a top FTSE 250 share to consider.
