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Over the last year, Greggs‘ (LSE:GRG) share price has crumbled roughly 20%. It plummeted again last week (8 January) after it said full-year profits are unlikely to grow in 2026.
At £16.57 per share, Greggs shares remain higher than November’s multi-year lows of £14.18. But from an historical perspective they still look dirt cheap.
Indeed, the FTSE 250 company’s forward price-to-earnings (P/E) ratio is 12.7 times. To illustrate how low this is, the 10-year average sits miles above this at 12.7 times.
Is this a top dip-buying opportunity for investors? Let’s take a look.
Share price falls… again
Market confidence in Greggs remains at rock bottom, and last week’s update sent its shares crashing again. Like-for-like sales growth in company-managed shops dropped to 2.4% last year, it said. By comparison, corresponding revenues increased 5.5% in 2024.
The year before that, like-for-like growth was 13.7%. Growth is halving every year, leading to speculation we’ve hit ‘Peak Greggs.’
Like other retailers, the baker’s troubles reflect weak consumer spending that’s impacting wider retail. A murky outlook for the UK economy suggest shoppers will keep the purse strings firmly tightened.
But this is only part of the story. Other major fast-food vendors are also rapidly expanding, putting further pressure on Greggs’ once-captivating growth story.
Signs of recovery
But are things as bad as Greggs’ share price collapse suggests? I’m not convinced.
Things are clearly tough, but it remains a heavyweight player in an ultra competitive industry. According to chief executive Roisin Currie last week, the retailer “outperformed the wider market and increased its market share of visits” in 2025.
Helped by these share gains, like-for-like sales growth at Greggs’ managed shops accelerated to 2.9% in Q4 from the previous three months. In fact, they were almost double the 1.5% recorded in Q3.
So what next?
I’m not expecting the company to stage a stunning sales recovery yet. Greggs itself has warned it expects “consumer confidence to remain a market headwind in the year ahead“, which — combined with costs associated with new supply chain capacity — means it’s anticipating zero profits growth in 2026.
But I think Greggs could still spring a sales surprise, pulling its share price higher. Even slight signs of good news could prompt a pickup in buying activity, given how cheap the company’s shares now are.
I certainly remain confident Greggs shares can bounce back once consumer spending starts to improve. Plans to open another 250 shops over the next few years remain in place, taking the total to 3,000 and creating a foundation for future growth.
Critically, these will be located in under-penetrated locations and places with high footfall like train stations and airports. But that’s not all. It’s also raising the number of franchised stores on its books, which are far more profitable than company-managed outlets.
But it’s not all about store expansion. With further menu refreshments on the cards, and its push into digital and evening channels rolling on. Evening trading is currently Greggs’ fastest-growing part of the day.
Investing in Greggs shares still comes with risk. But for investors seeking a top recovery play, I think the baker’s worth serious consideration.
