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However, underlying pre-tax profit fell 9.4% to £172m, while margins slipped from 9.7% to 8.7%. Inflation, higher infrastructure investment and poor weather all played a part. So while sales were strong, profitability came under pressure.
Even so, the shares now look cheaper. Greggs trades on a P/E ratio of 12.6, and the trailing dividend yield stands at a respectable 4.55%. On those figures alone, the stock could look like an attractive value opportunity. The board also held the 2025 dividend steady at 69p per share, although that decision was not well received by investors.
Anyone who bought Greggs shares a week ago hoping to snap up a bargain will be disappointed, though. The stock has fallen another 7% over the past week. That would have reduced a £4,993 investment, after charges, to £4,643 — a quick loss of £350.
That said, no one should buy shares with a short-term horizon. Ideally, investors should be thinking in terms of at least five years, and preferably longer.
For Greggs to regain strong momentum, it probably needs a meaningful economic recovery that leaves consumers with more money in their pockets. That does not look especially likely right now, with inflation and rising fuel costs continuing to squeeze households. At the same time, Greggs’ own costs may rise further, which could put additional pressure on margins.
On the positive side, Greggs is still a high-quality business with a strong brand, a solid dividend and a wide presence on UK high streets. The shares may perform well over the long run, but I think the business could face another difficult year or two. For now, I would rather look elsewhere for bargain FTSE 250 opportunities.
