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Spare a thought for holders of Greggs (LSE: GRG) shares. The sausage roll vendor’s worth has tumbled virtually 40% in 2025 alone. This leaves me questioning whether or not this once-adored FTSE 250 inventory — and one which occupied an area in my very own portfolio a few yr in the past — is now oversold.
Spoiler: I believe it could be.
Feeling the warmth
In its most up-to-date replace, the food-on-the-go retailer revealed that like-for-like gross sales in company-managed retailers rose by 2.6% within the first half of its monetary yr. All instructed, complete gross sales within the 26-week reporting interval climbed 6.9% to push via the £1bn boundary.
Nonetheless, there was a giant ol’ catch: June’s sizzling climate led to decrease footfall within the cities and cities wherein Greggs operates. Throw within the impression of retailer refurbishments and the mid-cap agency stated that full-year working revenue would now are available in “modestly under” that achieved in 2024.
This was by no means going to go down nicely with a market whose religion within the firm had already been rattled by softer buying and selling earlier within the yr.
Worse to return?
Since this sizzling spell seems to be set to proceed, issues may worsen for the Newcastle-based enterprise. Positive, Greggs will proceed to shift a number of chilly drinks. However a sizzling pasty whereas strolling down a excessive road on a scorching-hot day? That’s a tough promote.
For me, this now makes the subsequent set of interim outcomes — due 29 July — important studying. If there’s a whiff that revenue will now are available in ‘materially’ under present estimates, one other leg down seems to be doubtless.
Even when this doesn’t occur, a worse-than-expected inflation learn subsequent week could possibly be sufficient to upset just a few extra buyers. In the beginning of the month, CEO Roisin Currie and her group mirrored that its outlook on prices was “unchanged” and that “mitigation measures are anticipated to reinforce second-half efficiency“. May this show optimistic?
Momentary troubles
Right here’s the factor: this heat climate gained’t final. And when the rain and cooler temperatures inevitably return, it’s certainly an excellent guess to imagine that buyers, workplace staff and travellers will return.
It additionally appears doubtless that many meals retailers are struggling within the present local weather. Due to its low-priced treats, Greggs ought to be one of many extra defensive of the lot.
Talking of worth, I can purchase the inventory as we speak for the equal of 13 occasions forecast earnings. This seems to be low-cost relative to the corporate’s common price-to-earnings (P/E) ratio of 28 over the past 5 years. Truly, that would show to be a superb cut price if it may well proceed rising its retailer property as deliberate. A minimum of 87 new retailers opened their doorways within the first half of 2025.
With the dividend yield at the moment standing at 3.9%, there’s a pleasant revenue stream too. Regardless of present woes, this could nonetheless be comfortably lined by revenue.
Sitting patiently
When a well-run enterprise suffers a considerable fall in recognition amongst buyers, I’ll all the time have a look. My curiosity then grows if the issues look non permanent.
Summing up, Greggs shares may have additional to fall. However I additionally marvel if a number of ache is now priced in.
I’ll look forward to that subsequent outlook assertion earlier than deciding whether or not to press the Purchase button.
