It’s been a terrible year for Greggs‘ (LSE:GRG) share price, but the stock’s been showing signs of life recently. So will it launch a comeback in 2026?
The number investors need to focus on is like-for-like sales growth. That’s why the stock crashed in 2025 and – in my view – what will determine how it goes in the next 12 months.
Sales growth
One of the first questions investors looking at any business should have is what will the long-term sales growth be? And that’s especially interesting in the case of Greggs.
In its interim results (published in July) the company announced revenue growth of 7%. That’s pretty good, but it doesn’t tell the full story. Part of this has been the result of opening more outlets. While this isn’t a bad thing, it can’t do this forever and that means investors shouldn’t expect that kind of growth indefinitely.
Like-for-like sales growth adjusts for changes in the firm’s store count. On that basis, Greggs managed revenue growth of just 2.6%, which is barely above the rate of inflation.
In fact, like-for-like sales growth has been weak for some time now and that’s a big reason why the stock’s crashed. And it fell even further to 1.5% in company-owned stores in Q3.
The stock now trades at a price-to-earnings (P/E) ratio of 12 and I think that’s reasonable for a business where long-term growth is likely to be below 3%. But will things be better in 2026?
Short-term challenges?
My sense is that a lot comes down to like-for-like sales growth. The other potential issue is margins and cost increases are worth keeping an eye on, but the main issue is revenues.
Greggs has been trying to give shareholders reasons for optimism. More than once in the last year, the firm has cited unusual weather conditions for faltering demand. That’s a reason to be positive looking forward. The UK might have another hot summer (I hope so for reasons that have nothing to do with investing) but it isn’t something to count on.
A higher National Minimum Wage might also give consumers more money to spend. And lower interest rates could help household budgets, though it comes with a risk of inflation.
Greggs has been increasing prices, but it still offers compelling value for customers. And I think this should allow it to do well in a better macroeconomic environment. Given this, I think investors might well be cautiously optimistic about like-for-like sales growth in 2026. And if that happens, the share price could bounce back.
Outlook
An improvement in like-for-like sales growth in 2026 could vindicate the idea that the last year has just been a tough one for Greggs. And that happens with even the best businesses.
On the other hand, if there isn’t a meaningful improvement, this could justify the view that long-term growth’s likely to be weak. That would be a much worse outcome for investors.
My guess is that there’s some truth to the idea that the challenges are temporary. But while I think that makes Greggs’ shares attractive, they’re not my top pick heading into 2026.
