Greggs (LSE:GRG) shares have suffered a dramatic 49% fall from grace over the last 14 months. Since the start of 2022, the drop is 51%.
And despite the odd little burst here and there in 2025, this FTSE 250 stock is showing no signs of fully recovering any time soon. In fact, it’s now languishing at the same level it was all the way back in early 2019!
But surely it’s just a matter of time before the beloved baker’s shares start recovering? To get an idea of when that might happen, I turned to AI assistant ChatGPT to see what it ‘thinks’. Here’s how it answered.
Bruised but not broken
First off, the bot said what I suspect is the case here: Greggs is “bruised” but the “fundamentals aren’t broken“. In the 13 weeks to 27 September, total sales were up 6.1%, and they’ve risen 6.7% year to date. That doesn’t look like a crisis.
Unfortunately though, investors weren’t paying attention to these figures. Instead, they focused on like-for-like sales in company-managed shops, which only rose 1.5% in these 13 weeks (and 2.2% year to date).
Like-for-like measures sales growth at existing shops, stripping out the effect of new openings and closures. Essentially, it’s a better indicator of underlying demand and customer traffic trends. And with the UK retail market on its knees right now due to inflation and weak consumer confidence, this is problematic.
Back in the summer, Greggs warned that this year’s operating profit will likely come in lighter than 2024, as it grapples with the extra tens of millions in annual employment costs. Investors are worried businesses might be in the firing line again in the budget later this month.
When might things recover?
This last point is something that ChatGPT completely fails to mention. But I think it’s important, as the policies announced (or not) in the forthcoming budget could influence investor sentiment one way or the other.
After all, Greggs employs tens of thousands of people, so small tax and wage changes can really add up. And if investors lose even more faith in the direction of the UK economy, this could have a negative knock-on effect for Greggs’ growth and its share price.
In terms of company operations, ChatGPT said progress will likely be made “through a sequence of boring, better-than-feared” trading updates.
When I pushed it to give me a timeline, it said its base case was “early signs of recovery inside six to 12 months“, if Greggs delivers two solid updates showing improved like-for-like sales growth.
Sycophancy
One massive problem with ChatGPT is that it tends to be overly agreeable, In other words, it often echoes users’ views back to them, similar to social media echo chambers.
Researchers have called this ‘sycophancy’. For stock research, I think this tendency can be very dangerous, for obvious reasons.
Therefore, I would never let it make an investment decision for me.
My view
Greggs shares are currently trading for just 12.4 times forward earnings. Not only is this a massive discount to the 10-year average (22.5), but the dividend yield is now at 4.3%.
The near-term outlook is murky. But with the stock at a steep discount and offering a decent income yield, I reckon it’s a long-term buying opportunity worth thinking about.
