Greggs (LSE: GRG) shares have been through quite the drama over the past few years. And the next chapter is about to conclude on 3 March with the release of 2025 full-year results.
We shouldn’t have any shocks at this stage, as we already know sales were up 7.4% in Q4, and up 6.8% for the full year. Shop openings look set to continue at a steady pace. And Greggs expects year-end net cash of £47m, down from £125m in 2024.
But what investors really want is some clues as to where the Greggs share price is likely to go next. After all, the ups and downs of the past five years appear more fitting for a risky new tech stock, and not an established high street bakery chain.
Rocky road
Let’s briefly check back on the past five years, shown below. Greggs shares peaked at an all-time intra-day high of 3,443p at the end of 2021. They went on to collapse as low as 1,650p by September 2022. Then another bullish spell took the price all the way back up to 3,250p almost exactly two years later.
Wind forward to today, and we’ve had a cratering share price again, down at 1,578p at the time of writing.
Sales have been rising steadily throughout this period. But profits have been squeezed by supply cost inflation. And even out as far as 2027, forecasts still don’t show earnings per share (EPS) even matching 2023 levels — never mind 2024’s recent record. As a customer, I like Greggs keeping price rises as small as possible. But shareholders might be less thrilled.
Sensible valuation?
The stock’s valuation has been a bit wild too. At the end of 2021, the price-to-earnings (P/E) reached 29. The reason? In my mind — and admittedly with the benefit of hindsight — it was just the market going off the rails a bit. We’re now looking at a multiple of around 13 based on those upcoming 2025 results.
With modest earnings rises on the cards for 2026 and 2027, the P/E should decline a bit — to about 12. And we should probably expect dividend yields of around 4.3% to 4.5% in the next few years. Do you know what I see in all this?
I see a well-run company in a competitive business. It sounds like it should continue with decent — though not stellar — profits. Reasonable dividends are lined up. And to me, Greggs shares look like they’re selling at a fair price.
Back to normal?
So that’s the picture I hope to see reinforced on 3 March. An end to the madness of the past few years, and something closer to a long-term rational approach from the investing world.
I might wait a while to see if the share price really has stabilised. There has to be a chance of further falls, as the valuation still doesn’t shout ‘screaming cheap’ to me. But once normality is seen to have resumed, Greggs has to be a potential long-term consideration.
