Could Greggs shares bounce back and pull a Rolls-Royce?

At the moment buying and selling round £15 every, Greggs (LSE: GRG) shares have misplaced greater than half their worth since their 2022 excessive above £33.

It’s a surprising comparability to the promising development inventory it as soon as was within the late 20-teens. And that’s precisely why it intently mirrors the worth exercise of Rolls-Royce between 2010 and 2020.

So may Greggs do a full 180 and rack up exponential good points within the coming 5 years?

Let’s take a nearer look.

Macro challenges

The parallels between Greggs right now and Rolls-Royce in prior years run deeper than simply the share worth.

In each instances, sharp downturns have been pushed largely by exterior components. In Rolls’ case, the Covid-19 pandemic grounded international air journey. For Greggs, shifting client habits and wage hikes have hit income onerous.

However we will’t attribute Rolls’ success purely to recovering air journey, in any other case all airways would have comparable fortunes. The position of CEO Tufan Erginbilgiç within the restoration can’t be overstated, which is the place Greggs comes into query. 

Can Gregg’s CEO Roisin Currie, appointed in 2022, assist the bakery enact a Rolls-like restoration?

Why a Greggs restoration is believable

A number of components play into the narrative of a robust restoration for Greggs. Most notably, it nonetheless has a robust underlying model and money circulate.

It’s seen as a main ‘worth meals‑to‑go’ model, with resilient like‑for‑like gross sales, and a pipeline of retailer openings and new‑venue codecs (rail, forecourts, supermarkets).

After its sharp fall from 2021 highs, analysts now describe it as ‘low cost’ relative to earnings and money technology. The present worth is barely 12 occasions estimated future earnings.

That’s engaging for a client‑defensive, asset‑mild enterprise. With prices falling, administration now targets a return on capital employed (ROCE) restoration of round 20%. So even a modest margin enchancment may re‑price the shares.

Meaning the expansion narrative of the 20-teens may return in full power – if exterior points ease.

However will or not it’s a Rolls-like restoration?

Whereas I’m optimistic about Greggs, I’m additionally sensible. Rolls’ 1,000%+ rally got here from a leveraged stability sheet turnaround, double‑digit margin enlargement, and intensive authorities defence spending.

Greggs is completely different in that it’s a smaller, extra cyclical, aggressive client‑retail inventory. It doesn’t exhibit fairly the identical structural leverage and explosive potential.

Add to that ongoing challenges just like the cost-of-living disaster, weather-sensitive foot site visitors, and evolving consuming habits, and it faces a powerful future.

I believe it’s affordable to count on development within the 300%-400% vary over the approaching 5 years if situations enhance and it caters to altering habits.

However it’s extremely unlikely that any FTSE inventory will match Rolls’ once-in-a-decade efficiency.

The underside line

Arguably the UK’s hottest excessive avenue bakery chain, Gregg’s has grown aggressively since 2020. Between 2020 and 2025, it elevated its retailer depend from round 2,000 to over 2,700.

However the fast enlargement could have been untimely. After the Labour authorities launched budgetary adjustments in October 2024, the corporate was confronted with the specter of rising prices.

And but regardless of these ongoing dangers, it’s managed to take care of a wholesome stability sheet. Shrinking margins are a concern however rising money circulate and a horny valuation trace at restoration potential.

The long run could also be unsure, however for worth traders optimistic in regards to the UK financial system, Greggs is a compelling possibility to contemplate.