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The Greggs (LSE: GRG) share worth was already in hassle earlier than the Iran conflict despatched buyers right into a panic. After an excellent run, when the FTSE 250 bakery chain may do no improper, its gross sales, income and share efficiency all began to chill in late 2024.
Center East worries tensions to make a foul state of affairs worse by driving up inflation and leaving shoppers feeling even poorer. Traders who anticipated Greggs’ shares to take a beating could also be in for a shock although. They’re really up 5.8% over the past week. Solely six FTSE 250 shares did higher. What’s occurring?
FTSE 250 blended bag
Whereas buyers obsess over geopolitical occasions, particular person firm information can nonetheless drive share costs. Final Tuesday (3 March), Greggs reported that complete gross sales rose 6.8% to £2.2bn within the yr to 27 December whereas like-for-like gross sales in company-managed outlets climbed 2.4%.
Chief govt Roisin Currie hailed a “resilient” efficiency, pointing to rising market share and continued strategic progress. That will clarify why the shares have held up. But these weren’t precisely stellar outcomes.
Underlying pre-tax revenue fell 9.4% to £172m, hit by quantity strain and rising fastened prices tied to manufacturing, logistics and know-how capability.
Greggs was additionally pretty downbeat in regards to the outlook. It expects market circumstances to “stay difficult” this yr. I don’t assume anyone would dispute that proper now.
Greggs insists its sturdy worth proposition ought to help gross sales, however the brand new monetary yr regarded sluggish, even earlier than Iran. In these straitened instances even a cheeky journey to Greggs is beginning to really feel like a luxurious for a lot of.
The group captured the general public temper brilliantly for years, however Dan Coatsworth, head of markets at AJ Bell, has highlighted a “nagging feeling its proposition is turning into stale”, regardless of the corporate always refreshing its menu.
Progress, worth and revenue
I see his level. I’m not a pure Greggs buyer however I’ve popped in for the odd sausage roll or steak bake through the years. These days although, I haven’t a lot fancied it. Greggs admits dietary preferences are shifting. Customers are more and more on the lookout for extra protein, extra fibre and smaller parts. The rising recognition of weight-loss medicine may additionally have an effect.
Once I final checked out Greggs‘ shares on 1 March, the price-to-earnings ratio regarded critically tempting at 10.5. That was lower than half the extent seen throughout the increase years. 9 days later, it’s climbed to round 13.85.
The shift most likely displays weaker earnings in addition to the current bounce within the share worth. It’s respectable worth as we speak, however not filth low-cost. The trailing dividend yield has dipped barely to about 4.2%, though that also appears fairly interesting for revenue seekers.
Even so, I’m not massively excited by these outcomes, and surprise if Greggs’ second has handed. Die-hard followers would possibly contemplate shopping for its shares as we speak, however I can see loads of FTSE 100 and FTSE 250 shares that look extra tempting within the present volatility.
