Greggs, a familiar sight on the bustling streets of the UK, has transformed from a national joke to a beloved national treasure. The aroma of their sausage rolls and steak bakes attracts and satiates the hunger of millions. But behind the clever marketing and widespread popularity lies the burning question – does Greggs deserve the spotlight its shares receive?
- Long-Term Growth: A decade ago, Greggs shares traded at 725p. Today, they have skyrocketed to a hefty 2,824p, marking an impressive growth of almost 290%. For long-term investors, this performance justifies the buzz surrounding Greggs. However, recent growth has slowed down to 10.6% in the last 12 months, sparking curiosity about the future.
- Market Value: Standing tall with a market cap of £2.87bn, Greggs has carved its place amongst the FTSE 250 giants. An astounding 290% growth could potentially catapult it to an £11.2bn company, nearing the likes of FTSE 100-listed Marks and Spencers Group valued at £7.82bn.
- Expansion: With 2,500 stores already in operation, Greggs aims to reach a total of 3,500 outlets. Venturing beyond the confines of UK high streets, the brand plans to infiltrate railway stations, airports, supermarkets, and retail parks, alongside exploring evening openings.
While expanding their network seems a straightforward task given the established formula, challenges lie ahead. The recent Q3 update revealed a slight decline in growth pace, triggering concerns about the anticipation built into the share price, which now trades at more than 20 times earnings.
Amidst rising costs due to Labour’s decisions, analysts hold positive outlooks, predicting a 16% rise in the share price. RBC Capital Markets suggests seizing the current opportunity to invest, assuring that Greggs can navigate higher labor costs while making their delectable offerings more accessible with rising wages.
In conclusion, Greggs’ next trading update promises insights that could sway investment decisions. As investors await the outcome, the growth potential and strategic approach suggest that Greggs indeed deserves to be on the radar of keen observers.
