Picture supply: Getty Photos
Supported by speedy enlargement, earnings at Greggs (LSE:GRG) have rocketed over the previous decade, which in flip has pushed its shares by means of the roof.
At £21.20 per share, Greggs’ shares are 154% dearer than they have been 10 years in the past.
However is the FTSE 250 baker nonetheless probably the greatest progress shares to contemplate shopping for right now?
Progress forecasts
From a short-term perspective, maybe not. Analysts anticipate annual earnings progress to halve this yr earlier than choosing as much as improved single-digit percentages in 2026:
| Yr | Earnings per share | Earnings progress | Value-to-earnings (P/E) ratio |
|---|---|---|---|
| 2024 | 134.74p | 8% | 15.9 occasions |
| 2025 | 139.49p | 4% | 15.3 occasions |
| 2026 | 150.96p | 8% | 14.2 occasions |
There are many different mid-cap UK shares tipped to supply higher earnings progress over the subsequent two years.
The anticipated progress drop for 2025 isn’t that stunning given current buying and selling. Brokers have been downgrading forecasts following information on 9 January that revenues rose ‘just’ 7.7% within the closing quarter.
This was down from 10.6% in quarter three, and 13.8% within the first half.
Like-for-like gross sales, in the meantime, slowed to a crawl in quarter 4. They rose simply 2.5%, down sharply from 5% within the prior three months.
Fears rising
Buying and selling clearly hasn’t been catastrophic, although. Final yr, gross sales moved by means of the £2bn landmark for the primary time, with revenues rising even because the cost-of-living disaster dragged on. This isn’t the primary time Greggs has delivered progress regardless of powerful financial circumstances.
But it’s additionally doable to know why the market’s been underwhelmed by current numbers. The corporate’s concentrate on low-cost meals retail means such resilience is already baked (no pun meant) into buyers’ expectations.
As an alternative, Greggs’ current gross sales numbers have ignited issues over whether or not the agency’s progress methods — like larger night buying and selling, menu refreshments, and extra Click on and Acquire — might be operating out of steam.
What subsequent?
Given the powerful financial outlook, I wouldn’t be shocked if Greggs gross sales disappoint a bit longer, placing contemporary stress on its share worth.
However my view is that the baker’s progress outlook stays sturdy over the long run. It’s why I’ve taken benefit of current worth weak point to purchase extra of its shares for my very own portfolio.
New retailer openings have been the bedrock of Greggs’ hovering earnings in recent times. And encouragingly, it sees additional scope for extra vital enlargement.
The agency’s added round 1,000 shops to its nationwide community for the reason that mid-2010s. It plans to chop the ribbon on one other 800, taking the whole to three,500. What’s extra, the baker plans to ramp up retailer openings in profitable journey locations resembling airports and rail stations.
Additional enlargement will probably be supported by funding in new distribution and manufacturing websites. Final yr, it introduced new amenities in Derby and Kettering, scheduled to open in 2026 and 2027, respectively. There may be execution threat right here, however Greggs’ sturdy report on this entrance ought to assist soothe buyers’ fears.
I’m additionally assured that Greggs’ enhanced supply and digital providers and longer retailer opening hours will assist mild a fireplace below long-term earnings progress.
Because of this, I nonetheless suppose Greggs stays a high progress share for buyers to contemplate shopping for, regardless of the corporate’s present troubles.
