If Greggs (LSE: GRG) shares threw a party, at least we’d know what the catering looked like. Tasty, filling, slightly excessive. There’d be sausage rolls, steak bakes and lurid doughnuts. Everyone would laugh at the novelty while tucking in. Later, there’d be regrets. And that’s roughly where we are with the Greggs share price today.
After a brilliant run, it’s entered the ‘morning-after-the-night-before’ phase. Having peaked at 3,337p at the end of 2021, the shares now trade at 1,567p. That’s more than a 50% slump in just over three years.
I’m no better than anyone at forecasting share price moves, but I got it right with Greggs. It seemed to me that investors had got a little carried away.
FTSE 250 fun
Vegan sausage roll publicity helped turn the chain into a national talking point. Articles about Greggs on The Motley Fool performed remarkably well. Better than I’d expect for a solid FTSE 250 growth stock. I started to worry there was a mini cult forming. Nothing sinister, just enthusiasm pushing the valuation too far. At one point, the price-to-earnings (P/E) ratio was heading towards 25.
Greggs appeared to have conquered the cost-of-living crisis. Cash-strapped Britons could still afford a quick, comforting fill-up. And the menu was evolving beyond old-school stodge.
Mac and Cheese went viral on TikTok. Firecracker Loaded Wedges, Korean Chicken Wraps, Chicken Goujons and the Feta, Red Pepper and Spinach Bake pushed the brand into trendier territory at prices people could manage. Until they couldn’t.
The wobble began in autumn 2024. Sales were still growing, but at a slower pace. On 8 January, Greggs said fourth-quarter total sales rose 7.4% year on year, with full-year growth of 6.8%. Respectable enough. But like-for-like sales growth in company-managed shops was a more modest 2.4%.
More concerning, the board warned profits are expected to remain broadly flat in 2026, citing subdued consumer confidence. That outlook could improve if interest rates fall and shoppers feel better off, but that’s not guaranteed.
Stock being squeezed
Margins are also under pressure. Greggs is overhauling its supply chain, continuing its store rollout and cutting costs to protect profitability. Today, the shares look cheap again. The P/E has slumped to a bargain price of 10.5. The trailing yield of 4.37% adds to the appeal. Consumer stocks are cyclical. And I’m finally tempted to sink my teeth into Greggs shares.
But there’s a fresh risk. On 9 February, broker Jefferies recently downgraded the shares from Buy to Hold and slashed its price target from 2,500p to 1,610p, warning that weight-loss jabs could dent demand.
Have we really reached that point already? Is the nation about to abandon sausage rolls for salads? Greggs sells them too. Jefferies accepts the chain still boasts strong brand equity, an attractive return on invested capital, robust cash generation and a “still‑compelling long‑term rollout opportunity”.
At today’s valuation, Greggs still looks pretty tasty to me. Britons will continue to fancy a cheeky Greggs, weight-loss injections or not. I think the shares are worth considering, with a long-term view. But I wouldn’t expect the same crazy party as before.
