The Motley Fool

Is the Greggs share price now an opportunity?

Image source: Getty Images.

The Greggs (LSE: GRG) share price is almost half the value it was this time last year. Not surprising, given the impact of Covid-19 and lockdown. Looking at the company however, I see signs of strength and resilience. These are things we can benefit from when this pandemic ends.

Latest earnings

If you look at the headlines from Gregg’s latest results, most focus on its need to reduce staff hours. Greggs has been using the government furlough scheme to keep staff employed, and when the scheme ends it simply won’t need as many shops open or people working as many hours.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

According to CEO Roger Whiteside, about half of its stores have people contracted to work more hours than is needed. The Greggs share price fell about 7% on the news. Interestingly though, if you look at the other numbers in the release, I think things were pretty positive.

Greggs reported that trading this month has been about 76% of the level it was this time last year. Across its stores, sales averaged about 71% of 2019 levels. In ordinary times this news would be terrible – but these are not ordinary times.

To show such resilience in its numbers during a year of Covid-19 and lockdowns, I think speaks volumes. I see this strength coming from two things – the strong brand and the location of its stores.

Wall St vs. Maine St.

While offices across the country have been going empty, all those businesses that rely on worker traffic have suffered. While the Costas and Starbucks of the City have been empty, however, the Greggs of the high street are still seeing customers.

This preference for local high street and shopping complex locales has allowed Greggs to keep money coming in. Even when lockdown ended, most office workers are still working from home. Many of those, it seems, want a sausage roll for lunch.

This is a simplistic analysis but the location of Greggs stores has been perfect for lockdown. The company also intends to keep taking advantage of changing customer patterns. Whiteside said Greggs will be focusing on opening stores in retail parks and roadside locations, because “it is the car borne shopper that is most active out of the home”.

When will the Greggs share price go back up?

All these factors are encouraging, but I don’t discount the uncertainty of Covid-19. The Greggs share price may be low enough for a bargain, but there is still potential for it to go lower yet.

Any further lockdowns will likely hit its sales even on the high street. Problems with infections could hurt its supply chain – has they already have in Newcastle and Leeds.

Meanwhile though I think its sales numbers are holding up well, they are still down. Between May and August, the company had negative cash flow, and though this is set to change in September, it may happen again.

That said, I believe the company can weather this storm. For me, its resilience in these times is evidence of its strength in better days. Personally it is just a matter of keeping an eye on the Greggs share price and being ready to pick it up on any more dips.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Karl has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.